What costs are included in the audit fee charged to a Casiola franchisee?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
| Reporting Non-Compliance | $150 per occurrence | 14 days of invoice | Payable for failure to timely submit Royalty and Activity Reports, and other reports and financial statements as required under Franchise Agreement. |
| Operations Non-Compliance | $500 to $1,000 per occurrence | 14 days of invoice | Payable for failure to comply with operational standards as required under Franchise Agreement, plus inspection and re-inspection costs incurred by us. |
| Payment Non-Compliance | $150 per occurrence | 14 days of invoice | Payable for failure to timely pay, when due, a fee or payment due to us under the Franchise Agreement, plus interest, costs and legal fees. |
| Interest | 18% per annum from due date | On demand | Payable on all overdue amounts, fees, charges, and payments due to us under the Franchise Agreement. Interest rate cannot exceed legal rate allowed by law and may be adjusted to reflect same. |
| NSF Check Fee or Failed Electronic Fund Transfer | 5% of amount or $50, whichever is greater, or maximum fee allowed by law | On demand | Payable if your bank account possesses insufficient funds and/or fails to process a payment or transfer related to a fee due from you to us. |
| Audit | Cost of audit plus expenses | On demand | For costs incurred by us for each financial audit, provided the audit determines underreporting of 2% or greater during any designated period. Includes expenses incurred by us including audit, legal, travel and reasonable accommodations. |
Source: Item 6 — OTHER FEES (FDD pages 12–18)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, if a financial audit determines underreporting of 2% or greater during any designated period, the franchisee is responsible for covering the cost of the audit plus any expenses incurred by Casiola. These expenses include audit, legal, travel, and reasonable accommodations. This fee is payable to Casiola on demand.
This means that if Casiola suspects a franchisee of underreporting revenue by 2% or more and conducts an audit that confirms this, the franchisee will have to pay for not only the audit itself but also any legal fees Casiola incurs, travel costs for auditors or legal personnel, and the cost of their accommodations during the audit process. This can potentially amount to a significant expense for the franchisee, especially if the audit is complex or requires extensive travel.
Franchisees should maintain accurate and transparent financial records to minimize the risk of triggering an audit. Understanding the specific circumstances that could lead to an audit and the potential costs involved is crucial for managing financial risks within the Casiola franchise.