Under what conditions 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.
Specifically, a Cicis franchisee will be responsible for reimbursing Cicis for audit costs if the audit was initiated due to the franchisee's failure to provide required records or reports. Additionally, reimbursement is required if the audit reveals an understatement of payments due to Cicis of 3% or more. These costs and expenses include reasonable accounting and attorneys' fees.
This provision ensures that Cicis can verify the accuracy of reported revenues and compliance with the franchise agreement. It also incentivizes franchisees to maintain accurate records and submit timely reports. The 3% threshold provides a reasonable buffer, preventing franchisees from being penalized for minor discrepancies while still holding them accountable for significant underreporting.