What is the cost of an audit by Carvel, and when is it due?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee1, 4 | Amount | Date Due | Remarks |
|---|---|---|---|
| you an extension to any of these deadlines. We may terminate the Franchise Agreement if you fail to open by the Opening Deadline or if you fail to cure a default of the Site Approval or Construction Start Deadlines. | |||
| Repeated Inspection Fee | $500 Non compliance Fee, plus any costs we are charged by third-party inspectors or otherwise incur. | On invoice | If we or our representative inspect you as a result of your repeated or continuing failure to comply with any provision of the Franchise Agreement, you must pay us the cost of the inspection, including the travel and living expenses of our representatives. |
| Audit | Cost of audit. |
Source: Item 6 — OTHER FEES (FDD pages 31–42)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, the cost of an audit is the cost of the audit itself, and it is due on invoice. If Carvel audits a franchisee and finds that the franchisee understated net sales by 2% or more, the franchisee must reimburse Carvel for all reasonable expenses connected to the audit, review, or examination. These expenses include reasonable accounting and attorneys' fees. Carvel estimates that typical audit costs would be approximately $1,000 to $4,000.
This means that a Carvel franchisee could incur significant costs if their financial reporting is inaccurate. While the initial audit cost is unspecified, the potential for additional expenses, especially if sales are underreported, could substantially increase the financial burden. Franchisees should ensure accurate record-keeping to avoid triggering an audit and the associated reimbursement costs.
It is important to note that the estimated audit cost of $1,000 to $4,000 is just an estimate. The actual cost could be higher depending on the complexity and scope of the audit. Franchisees should factor in the potential for these costs when managing their finances and ensure they have sufficient funds to cover such expenses if an audit is deemed necessary by Carvel.