What is a Chatime franchisee's obligation regarding cooperation with representatives of the franchisor during an audit?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) Franchisor may conduct an audit of Franchisee's books of account. The audit may be performed by independent accountants appointed by Franchisor. Franchisee must fully cooperate with representatives of Franchisor and independent accountants appointed by Franchisor to conduct such inspection or audit.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a franchisee must fully cooperate with representatives of Chatime and any independent accountants that Chatime appoints to conduct an inspection or audit. This cooperation is a requirement outlined in the franchise agreement, ensuring Chatime can accurately assess the franchisee's financial performance and compliance.
This obligation means a Chatime franchisee must provide access to all necessary financial records, reports, and other relevant information that the franchisor or its appointed accountants may request. This includes business records, bookkeeping and accounting records, electronic records and files, and tax records. The franchisee should be prepared to answer questions, provide clarifications, and assist in the examination of their financial data.
Failure to fully cooperate with an audit could result in penalties or further action from Chatime, as it is a breach of the franchise agreement. Moreover, if an audit reveals an understatement of fees owed to Chatime, the franchisee will be required to pay the outstanding fees plus interest. If the understatement of fees exceeds 2% or if the audit was necessitated by the franchisee's failure to provide timely and accurate reports, the franchisee may also be responsible for reimbursing Chatime for the costs of the audit, including legal and accounting fees.