Under what condition is a Canopy Lawn Care franchisee required to pay an audit fee?

According to Canopy Lawn Care's 2025 Franchise Disclosure Document, a franchisee is required to pay an audit fee only if an audit reveals an understatement of at least 2% of gross revenue for any month. The amount of the audit fee is the cost and expenses incurred by Canopy Lawn Care to conduct the audit.

This means that Canopy Lawn Care franchisees must maintain accurate financial records and report their gross revenues correctly. If a franchisee's reported gross revenues are significantly lower than what an audit determines they should be, the franchisee will be responsible for covering the expenses associated with the audit. This provides an incentive for franchisees to be transparent and accurate in their financial reporting.

Franchisors commonly reserve the right to audit franchisees' financial records to ensure compliance with the franchise agreement and accurate royalty payments. The specific threshold that triggers an audit fee, such as the 2% understatement of gross revenue mentioned in the Canopy Lawn Care FDD, can vary among franchise systems. Prospective franchisees should carefully review the audit provisions in the FDD to understand their obligations and potential financial consequences.