Under what conditions must a Checkers franchisee reimburse Checkers for the cost of an audit or inspection?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Further, if such inspection or audit is made necessary by your failure to furnish reports, records or information on a timely basis, or if we determine an understatement of Net Sales for the period of any audit to be greater
than 2%, you must reimburse us for the cost of such audit or inspection, including the charges of any attorneys and independent accountants and the travel expenses, room and board and compensation of our employees.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, a franchisee may be required to reimburse Checkers for the cost of an audit or inspection under specific circumstances. If an audit reveals that the franchisee has understated their Net Sales, they are responsible for paying the royalties and National Promotion Fund (NPF) contributions due on the understated amount, along with interest.
Beyond the payment of understated amounts, the franchisee must also reimburse Checkers for the expenses of the audit or inspection itself if certain conditions are met. These conditions include situations where the audit was necessitated by the franchisee's failure to provide reports, records, or information in a timely manner.
Additionally, if the audit reveals that the understatement of Net Sales exceeds 2% for the audited period, the franchisee is also responsible for reimbursing Checkers for the audit costs. These costs can include charges from attorneys and independent accountants, as well as travel expenses, room and board, and compensation for Checkers' employees involved in the audit or inspection. This provision incentivizes franchisees to maintain accurate and timely financial reporting and sales records to avoid potential audit-related expenses.