What is the interest rate charged by Burros Fries on audit fees?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
| Audit Expenses | Cost of Audit Fees plus interest at 18% per annum (1.5% per month) up to the maximum interest rate allowed by law. | Ten days after receipt of audit report. | Payable to us only if you understate Gross Revenues by 2% or more. We expect the cost to be between $3,500- $6,500 unless your financial records are not well kept. |
Source: Item 6 — OTHER FEES (FDD pages 12–16)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, if a franchisee understates gross revenues by 2% or more, Burros Fries may conduct an audit. If an audit is conducted, Burros Fries charges interest on the audit fees. The interest rate is 18% per annum, which is equivalent to 1.5% per month. However, the interest rate will not exceed the maximum interest rate allowed by law.
The cost of the audit is estimated to be between $3,500 and $6,500. However, if the franchisee's financial records are not well-kept, the cost may be higher. The audit fees and interest are payable to Burros Fries ten days after the franchisee receives the audit report.
Franchisees should maintain accurate financial records to avoid understating gross revenues and incurring audit fees and interest charges. It is also important to be aware of the maximum interest rate allowed by law in their jurisdiction, as this may be lower than the 18% per annum stated in the Franchise Disclosure Document.