Under what circumstances will a Cicis franchisee be required to reimburse Cicis for audit costs?
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.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Cicis, or its designee, has the right to audit a franchisee's books and records at any reasonable time without cause or prior notice. However, the franchisee will only be required to reimburse Cicis for the costs and expenses connected with the audit under specific circumstances.
A Cicis franchisee will be required to reimburse Cicis for all costs and expenses connected with an audit (including reasonable accounting and attorneys' fees) if either of the following conditions are met: first, if the audit was initiated because the franchisee failed to provide required records or reports. Second, if the audit reveals an understatement of payments due to Cicis of 3% or more.
These audit-related remedies are in addition to any other legal or equitable remedies that Cicis may pursue. This means that Cicis retains the right to take further action to recover any amounts owed or to address any other violations discovered during the audit, beyond simply requiring reimbursement for the audit costs themselves. Prospective franchisees should be aware of these potential financial risks associated with non-compliance or inaccuracies in their financial reporting to Cicis.