What costs can Canine Dimensions include when billing a franchisee for an audit?
Canine_Dimensions Franchise · 2025 FDDAnswer from 2025 FDD Document
y cooperate with Franchisor's representatives conducting any such audit. In the event that any such audit should disclose
any understatement of Gross Sales, Franchisee shall pay, within fifteen (15) days after receipt of the audit report, two (2) times the royalty fees and any other amounts (including, without limitation, interest pursuant to Section 5.5.3) due upon the amount of such understatement. Further, in the event such audit is made necessary by the failure of Franchisee to furnish reports, financial statements, tax returns or schedules as herein required, or if an understatement of Gross Sales for any month is determined by any such audit to be greater than two percent (2%) of the Gross Sales for such month disclosed by the audit, Franchisee shall reimburse Franchisor for the cost of such audit, including, without limitation, the charges of any independent accountants, legal fees, and travel expenses, room, board and compensation of their employees or representatives, which fee will not be less than Two Hundred Fifty Dollars ($250). The foregoing remedies are in addition to all other rights and remedies Fra
Source: Item 22 — CONTRACTS (FDD page 36)
What This Means (2025 FDD)
According to Canine Dimensions' 2025 Franchise Disclosure Document, a franchisee may be responsible for reimbursing Canine Dimensions for the cost of an audit under specific circumstances. This reimbursement is required if the audit was necessary due to the franchisee's failure to provide required reports, financial statements, tax returns, or schedules.
Additionally, Canine Dimensions will bill the franchisee for audit costs if the audit reveals an understatement of Gross Sales exceeding two percent (2%) for any given month. The costs that Canine Dimensions can include in this reimbursement are charges from independent accountants, legal fees, travel expenses, room and board, and compensation for their employees or representatives involved in the audit. The minimum fee for such an audit will be $250.
This policy means that franchisees must maintain accurate financial records and provide timely reports to avoid triggering an audit and incurring these potentially significant costs. Franchisees should ensure they understand the reporting requirements and maintain meticulous records to minimize the risk of errors or discrepancies that could lead to an audit. The financial burden of an audit, especially with added fees and expenses, could impact a franchisee's profitability, making compliance with reporting requirements crucial.
It is important to note that these audit-related remedies are in addition to any other rights and remedies that Canine Dimensions may have under the Franchise Agreement or applicable law, including the possibility of terminating the agreement. This underscores the importance of adhering to the financial reporting requirements and maintaining accurate records to avoid potential financial penalties and legal ramifications.