Under what conditions will Chocolate Bash audit a franchisee?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Our actual costs | Payable only if (1) we audit you because | ||
| you have failed to submit required reports | |||
| or other non-compliance, or (2) the audit | |||
| concludes that you under-reported gross | |||
| sales b |
Source: Item 6 — OTHER FEES (FDD pages 9–13)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, Chocolate Bash may audit a franchisee under specific circumstances related to reporting compliance and accuracy. The FDD outlines that Chocolate Bash will charge a fee to cover the costs of an audit only if (1) the franchisee has failed to submit required reports or is otherwise non-compliant, or (2) the audit reveals that the franchisee has under-reported gross sales by at least 2% during any period.
This policy means that Chocolate Bash franchisees must maintain accurate and timely financial records and submit all required reports as specified in the franchise agreement. Failure to do so can trigger an audit, the cost of which the franchisee will bear. Similarly, any under-reporting of gross sales, if significant enough (at least 2%), will also lead to an audit at the franchisee's expense.
For a prospective Chocolate Bash franchisee, this highlights the importance of diligent record-keeping and transparent reporting. It also serves as a financial incentive to ensure compliance with all reporting requirements and to accurately track and report gross sales. The 2% threshold provides a specific benchmark for determining when under-reporting will trigger an audit fee, offering clarity on the level of accuracy expected by Chocolate Bash.