What triggers the obligation to pay the Audit Fee to Christies International Real Estate?
Christies_International_Real_Estate Franchise · 2025 FDDAnswer from 2025 FDD Document
OTHER FEES**
| Fee (Note 1) | Amount (Note 2) | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee | 3% to 6% of Gross Revenues, depending on whether your Protected Territory is exclusive and other factors | Monthly | Paid via Electronic Funds Transfer (EFT). You and we will negotiate your Royalty Fee, which will vary based on whether your Protected Territory is exclusive and other factors. It will range between 3% and 6%. |
| Advertising Fund Fee | Currently not collected | If collected, monthly with the Royalty Fee | We do not currently have an Advertising Fund. If implemented, the Advertising Fund Fee will not exceed 3% of Gross Revenues. |
| Additional Training, Training, Designated Programming | Currently, not collected, but the expected range would be between $200 to $3,000, per person per day | Upon demand | (Note 3) |
| Additional Training | Currently, $500 per attendee per day | Upon demand | |
| Annual Conference Fee | Currently, the expected range would be $1,500 to $3,500 per person | Before attending the Annual Conference | |
| Transfer Fee | $5,000 | Before you complete the transfer | Subject to state law, you pay the transfer fee when the License Agreement, the Business, or a material interest in you is transferred. You do not pay the transfer fee if the transferee is an entity controlled by you. |
| Renewal Fee | $1,000 | Upon notice of intent to renew | |
| Audit Fee | Cost of Audit | When incurred | Payable if audit discloses an under reporting of Gross Revenues or underpayment to us by 5 |
Source: Item 6 — OTHER FEES (FDD pages 14–17)
What This Means (2025 FDD)
According to Christies International Real Estate's 2025 Franchise Disclosure Document, the Audit Fee is triggered when an audit reveals an underreporting of Gross Revenues or an underpayment to Christies International Real Estate by 5% or more. The fee itself is the cost of the audit. This fee is payable when it is incurred.
For a prospective franchisee, this means that Christies International Real Estate has the right to audit their financial records. If the audit uncovers that the franchisee has underreported their Gross Revenues or underpaid Christies International Real Estate by 5% or more, the franchisee will be responsible for covering the cost of the audit in addition to paying the underreported or underpaid amounts.
Franchisors commonly retain the right to audit franchisees to ensure accurate reporting of revenues and payment of royalties and fees. The 5% threshold provides some level of tolerance for minor discrepancies, but franchisees should maintain meticulous records to avoid triggering an audit and the associated Audit Fee. Franchisees should ensure they understand what constitutes Gross Revenues according to the License Agreement to avoid unintentional underreporting.