Is the Burros Fries System Advertising Fund audited?

According to Burros Fries's 2024 Franchise Disclosure Document, the System Advertising Fund is not audited. However, Burros Fries will prepare an annual unaudited statement of monies collected and costs incurred by the Fund, which they will furnish to franchisees upon written request.

This means that while franchisees contribute a percentage of their gross revenues (between 1% and 3%) to the System Advertising Fund, there is no independent audit to verify how the funds are being spent. Instead, Burros Fries provides an unaudited statement, offering a degree of transparency but without the assurance of an independent financial review.

While the fund is not audited, Burros Fries details how the advertising fees can be used, including salaries, administrative costs, travel expenses, and overhead related to administering the Fund and its programs. They also state that the fund will not be used to sell additional franchises. Franchisees have the right to request the annual statement to review the collections and costs.

The lack of an independent audit may be a concern for some prospective franchisees, as it relies on the franchisor's self-reporting. However, the provision of an annual statement and the potential for a Franchisee Advisory Council to advise on fund usage offer some level of oversight. Franchisees may want to discuss the advertising fund's governance and transparency with existing franchisees to gain further insight.