Under what condition does Burros Fries charge audit expenses?
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, franchisees may incur audit expenses under specific circumstances. Burros Fries will charge the franchisee for audit fees, plus interest at 18% per annum (1.5% per month), if the franchisee understates gross revenues by 2% or more.
The cost for these audit fees is estimated to be between $3,500 and $6,500. However, this range can increase if the franchisee's financial records are not well-maintained, suggesting that franchisees should prioritize accurate and organized record-keeping to avoid higher audit costs.
These audit expenses are payable to Burros Fries ten days after the franchisee receives the audit report. This relatively short payment window underscores the importance of franchisees being prepared to cover these potential costs if an audit reveals a significant understatement of gross revenues.