When is the audit fee payable to Card My Yard?
Card_My_Yard Franchise · 2025 FDDAnswer from 2025 FDD Document
| Liquidated Damages (Termination) | An amount equal to the greater of: (a) $6,600 or (b) the total royalties paid by you during the previous 12 months multiplied by two. If your Card My Yard business has not been open for at least 12 months, then your liquidated damages amount will be $6,600. | Upon your unauthorized closure of your Card My Yard business or any termination of the Franchise Agreement in connection with a breach by you. | This fee compensates us for your unauthorized closure of the Card My Yard business or any termination of the Franchise Agreement in connection with a breach by you. |
|---|---|---|---|
| Liquidated Damages (Non Reporting or Underreporting) | An amount equal to $5,000 per occurrence will be owed for each instance when we document your intentional non-reporting or under-reporting of revenues that you realize and receive from your Card My Yard business. | On demand | This fee compensates us for the time, expense, legal fees, and related costs associated with non-reporting, under reporting and intentional withholding of royalty and related obligations associated with revenue in the event that you intentionally omit revenues from your reporting. |
| Audit Fee | Cost of audit | When billed | Payable if an examination or audit shows you have understated any amount owed to us by 2% or more. |
Source: Item 6 — OTHER FEES (FDD pages 15–23)
What This Means (2025 FDD)
According to Card My Yard's 2025 Franchise Disclosure Document, the audit fee is payable 'when billed.' This fee is incurred if an examination or audit reveals that the franchisee has understated any amount owed to Card My Yard by 2% or more.
In practical terms, this means that if Card My Yard suspects a franchisee is underreporting revenue or other amounts owed, they can conduct an audit. If the audit confirms an underreporting of 2% or greater, the franchisee will be responsible for covering the cost of the audit itself, in addition to paying the understated amount. The audit fee covers the expenses Card My Yard incurs to perform the audit.
Franchisees should maintain accurate and transparent financial records to avoid triggering an audit. Even if the underreporting was unintentional, the franchisee would still be responsible for the audit fee if the discrepancy meets the 2% threshold. This policy incentivizes franchisees to ensure their financial reporting is accurate and complete.