Who may perform the audit of the Developer's books of account for Chatime?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) Franchisor may conduct an audit of Developer's books of account (and, if applicable, the books of account maintained by Franchisees). The audit may be performed by independent accountants appointed by Franchisor.
- (4) If any such audit discloses an understatement of the initial and/or recurring fees received by Developer under the Franchise Agreements, Developer must pay to Franchisor within 15 days after receipt of the inspection or audit report the fees due on the amount of such understatement plus interest at the rate and on the terms provided for in this Agreement from the date originally due until the date of payment.
- (5) If in Franchisor's opinion an inspection or audit is required because of the failure of Developer to furnish reports, supporting records, other information or financial statements as required, or to furnish such reports, records, information or financial statements on a timely basis, or if an understatement of fees received by Developer for the period of any audit is determined by any such audit or inspection to be greater than 2%, Developer must reimburse Franchisor for the cost of such inspection or audit, including, without limitation, legal fees and accountants fees, and the travel and accommodation expenses applicable per day for employees of Franchisor.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime may conduct an audit of the Developer's books of account. This audit can be performed by independent accountants appointed by Chatime.
This means that Chatime has the right to review the Developer's financial records to ensure compliance with the franchise agreement. The audit can be conducted by either Chatime's internal team or an external accounting firm that Chatime selects. The Developer is expected to cooperate fully with the audit process, providing access to all necessary financial documents and records.
If the audit reveals any underreporting of fees, the Developer is responsible for paying the owed fees along with interest from the original due date. Furthermore, if the underreporting exceeds 2% or if the audit was necessitated by the Developer's failure to provide timely or accurate reports, Chatime can require the Developer to cover the costs of the audit, including legal and accounting fees, as well as travel and accommodation expenses for Chatime's employees.