Does Cicis have the right to audit a franchisee's books and records?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. Audits. We or our designee have the right at all reasonable times to review, audit, examine, and copy your books and records as we may require without cause or prior notice you. If any payments required to be made to us under this Agreement are delinquent, or if an inspection reveals that such payments have been understated in any way, then you will immediately pay us the amount overdue or understated upon demand with interest determined in accordance with the provisions of Section 4.G. If we decided to conduct an audit because of your failure to provide any records or reports you are required to provide us or if an audit discloses an understatement in any way of 3% or more, then you will also reimburse us for all costs and expenses connected with the audit (including reasonable accounting and attorneys' fees). These remedies will be in addition to any other remedies we may have at Law or in equity.
- D. No Waiver. You understand and agree that our receipt or acceptance of any of the statements you furnish or payments you make to us will not preclude us from questioning the correctness thereof at any time and, in the event that any inconsistencies or mistakes are discovered in such statements or payments, you will immediately rectify such inconsistencies or mistakes and make the appropriate payment.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Cicis retains the right to audit a franchisee's financial records. Cicis, or its designated representative, can review, audit, examine, and copy a franchisee's books and records at any reasonable time, without needing to provide a reason or prior notice. This allows Cicis to ensure that franchisees are accurately reporting their sales and other financial information, and that all payments due to Cicis are being made correctly.
If a franchisee is late on payments or has understated them, they must immediately pay the overdue amount with interest as determined by Section 4.G of the agreement. Furthermore, if Cicis decides to conduct an audit because a franchisee failed to provide required records or reports, or if the audit reveals an understatement of 3% or more, the franchisee will be responsible for reimbursing Cicis for all costs associated with the audit. These costs include reasonable accounting and attorney's fees.
This audit clause is standard practice in franchising, allowing franchisors to maintain oversight and ensure compliance with the franchise agreement. However, the specific terms, such as the threshold for triggering reimbursement of audit costs (3% in Cicis's case), can vary between franchise systems. The FDD also states that Cicis's acceptance of a franchisee's statements or payments does not prevent Cicis from later questioning their accuracy, and franchisees are obligated to correct any inconsistencies or mistakes immediately upon discovery.