Under what financial condition will a Checkersrallys franchisee be required to reimburse Checkersrallys for the cost of an audit or inspection?
Checkersrallys 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 Checkersrallys's 2025 Franchise Disclosure Document, a franchisee may have to reimburse Checkersrallys for audit costs under specific circumstances. If an inspection or audit is required because the franchisee failed to submit reports, records, or information on time, the franchisee is responsible for covering the expenses.
Additionally, if an audit reveals that the franchisee understated their Net Sales by more than 2%, they must reimburse Checkersrallys for the cost of the audit or inspection. This reimbursement covers all associated expenses, including charges from attorneys and independent accountants, as well as travel, lodging, and compensation for Checkersrallys employees involved in the audit.
This policy incentivizes Checkersrallys franchisees to maintain accurate financial records and provide timely reports. Failure to do so can result in the franchisee incurring significant additional costs for audits. Franchisees should ensure they have systems in place to accurately track and report Net Sales to avoid potential audit-related expenses.