What is the minimum 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 Burros Fries's 2024 Franchise Disclosure Document, audit expenses are estimated to range from $3,500 to $6,500. This cost covers the audit fees, along with potential interest, which could be as high as 18% per annum or 1.5% per month, depending on the maximum interest rate permitted by law.
However, this audit expense is only payable to Burros Fries if the franchisee understates gross revenues by 2% or more. The FDD specifies that the estimate of $3,500 to $6,500 is contingent on the franchisee maintaining well-kept financial records. If the records are not well-maintained, the audit costs could potentially exceed this range.
In practical terms, a Burros Fries franchisee should prioritize maintaining accurate and organized financial records to avoid triggering an audit. Even if an audit is triggered, keeping good records can help minimize the potential costs. Franchisees should be aware of the conditions under which an audit may be conducted and the potential for interest charges on top of the audit fees.