Under what conditions must a Chicken Guy franchisee pay for audit and inspection costs?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE(1) | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| Audit and Inspection Costs | Deficiency in royalty fees and advertising contributions, plus interest. | Within ten days after receipt of the audit or inspection report | The interest rate is the same as the interest rate for late payments. If an inspection or audit is made necessary by your failure to furnish reports or supporting records, or to furnish such reports, records or information on a timely basis, or if there is an understatement of Gross Sales of greater than 2%, in addition to the understated royalty fees and advertising contributions, you also must pay the reasonable costs of the audit or inspection. |
Source: Item 6 — OTHER FEES (FDD pages 12–16)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, franchisees may be responsible for covering the costs of audits and inspections under specific circumstances. These costs, along with any deficiency in royalty fees and advertising contributions plus interest, are due within ten days after receiving the audit or inspection report. The interest rate applied will be the same rate charged for late payments.
Specifically, a Chicken Guy franchisee will be required to pay for these audit and inspection costs if the audit or inspection is triggered by their failure to provide reports or supporting records, or if these items are not submitted on time. Furthermore, if an audit reveals an understatement of Gross Sales exceeding 2%, the franchisee will be responsible for covering the reasonable costs of the audit or inspection, in addition to paying the understated royalty fees and advertising contributions.
This policy incentivizes Chicken Guy franchisees to maintain accurate and timely financial reporting. Franchisees should ensure they have robust systems in place for tracking and reporting Gross Sales, royalty fees, and advertising contributions to avoid triggering an audit and incurring these additional costs. Paying close attention to these requirements can help franchisees maintain a positive relationship with Chicken Guy and avoid unexpected financial burdens.