What is the maximum expected cost for audit expenses for a Burros Fries franchise?
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 the 2024 Burros Fries Franchise Disclosure Document, franchisees may incur audit expenses if they understate gross revenues by 2% or more. The cost of these audit fees, plus interest, is payable to Burros Fries ten days after receipt of the audit report. The interest is calculated at 18% per annum (1.5% per month) up to the maximum interest rate allowed by law.
The FDD indicates that Burros Fries estimates the cost of audit expenses to be between $3,500 and $6,500. However, this range is contingent on the franchisee maintaining well-kept financial records. If a franchisee's financial records are not well-maintained, the audit expenses could potentially exceed this estimated range.
Therefore, a prospective Burros Fries franchisee should prioritize maintaining accurate and organized financial records to minimize the risk of triggering an audit and incurring these expenses. It is also important to note that the $6,500 figure is just an estimate, and the actual cost could be higher depending on the complexity of the audit and the condition of the financial records.