What records can Chatime inspect, audit, and copy from The Franchised Business?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
dverse impact on the performance of Franchisee under this Agreement or the goodwill associated with the Marks or the Outlet.
- (5) Franchisee must fully disclose to Franchisor all information concerning the Franchised Business as Franchisor may reasonably require.
5.5 Inspections and Audits
- (1) Franchisor and its agents may at any time during normal Business Hours inspect, audit and make copies or extracts of the records and reports described in clause 5.4 and any other business records, bookkeeping and accounting records, electronic records and files, value added, sales, use, service, and income tax records and returns, and other records of The Franchised Business.
- (2) Franchisor may, at any time, during normal Business Hours and one hour before and one hour after normal Business Hours, inspect the premises of the Outlet for the purpose of:
- (a) Monitoring compliance by Franchisee of its obligations under this Agreement; and
- (b) Ensuring compliance by Franchisee of its financial obligations under this Agreement and for the purpose of verifying any financial information provided by Franchisee to Franchisor.
- (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.
- (4) If any such audit discloses an understatement of the initial and/or recurring fees received by Franchisee under this Agreement, Franchisee 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.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime and its agents have the right to inspect, audit, and make copies or extracts of various records related to the Franchised Business. This includes records and reports described in clause 5.4, which likely details specific required reports.
Chatime can also access any other business records, bookkeeping and accounting records, electronic records and files, value added, sales, use, service, and income tax records and returns. This broad scope allows Chatime to monitor the franchisee's compliance with the franchise agreement and verify the financial information provided by the franchisee.
This right extends to any time during normal business hours, giving Chatime considerable access to the franchisee's operational and financial data. Franchisees must fully cooperate with Chatime's representatives and independent accountants during these inspections or audits. If an audit reveals an understatement of fees, the franchisee is responsible for paying the owed fees plus interest. Furthermore, if the understatement exceeds 2% or the audit was required due to the franchisee's failure to provide necessary reports, the franchisee must reimburse Chatime for the cost of the inspection or audit, including legal and accounting fees, as well as travel and accommodation expenses for Chatime's employees.