What is the interest rate applied to underpayments discovered during an audit of a Carbones Pizzeria franchise?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
| (Column 1) Type of Fee1 | (Column 2) Amount | (Column 3) Due Date | (Column 4) Remarks |
|---|---|---|---|
| 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. |
Source: Item 6 — OTHER FEES (FDD pages 8–10)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, if an audit reveals an understatement of at least 2% of Gross Sales for any month, the franchisee is responsible for covering the cost of the audit. Additionally, Carbones Pizzeria will charge interest on the underpayment.
The interest rate applied to the underpayment is 1.5% per month from the date the payment was initially due. This is in addition to the cost of the audit itself, which the franchisee must also pay.
It is important for prospective Carbones Pizzeria franchisees to maintain accurate sales records and report them honestly to avoid triggering an audit and incurring these additional costs. Franchisees should ensure they understand what constitutes Gross Sales according to the franchise agreement to minimize the risk of underreporting.