When is the audit fee for Carbones Pizzeria payable?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
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| (Column 1) Type of Fee1 | (Column 2) Amount | (Column 3) Due Date | (Column 4) Remarks |
|---|---|---|---|
| Transfer | $5,000 | Prior to consummation of transfer | Payable when you sell your franchise or your business entity or a majority interest in said entity. No charge if franchise transferred to a corporation which you solely own. |
| Audit | Cost of audit plus 1.5% interest per month on underpayment from date initially due. | Upon billing | Payable only if audit shows an understatement of at least 2% of Gross Sales for any month. |
| Renewal | $1,500 | You must sign our then-current form of franchise agreement which may contain different terms and conditions than those in your Franchise Agreement, including diffe |
Source: Item 6 — OTHER FEES (FDD pages 8–10)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the audit fee is payable upon billing. The audit fee is imposed only if an audit reveals an understatement of at least 2% of Gross Sales for any month. The fee covers the cost of the audit, plus an additional 1.5% interest per month on any underpayment calculated from the date the payment was initially due.
This means that a Carbones Pizzeria franchisee will only be charged an audit fee if their reported gross sales are significantly lower than what the franchisor's audit determines they should be. The 2% threshold provides some leeway, but consistent underreporting could trigger an audit and associated fees. The 1.5% monthly interest charge on underpayments acts as a penalty for not remitting the correct royalty and advertising fees in a timely manner.
Franchisees should maintain accurate sales records and diligently report gross sales to avoid any discrepancies that could lead to an audit. It is also important to note that the audit fee is in addition to any potential late fees associated with underpayment of royalties or advertising fees. The franchisor has the right to collect fees via preauthorized check draft, credit card charge, or electronic funds transfer, requiring franchisees to sign the necessary authorization documents.