Under what conditions does Cinch I.T. charge a fee for audits?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
| TYPE OF FEE1 | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| to client | must pay us for our time and any compensation (i.e., replacement product) given to clients. | ||
| Audits | Cost of audit plus interest on underpayment | As incurred | Payable only if audit shows understatement is willful or if 2% or more of gross sales for a two month period. |
| Interest | Interest on overdue payment | As incurred | Interest rate will be 1.5% per month or if the maximum interest rate permitted by state law is less, then interest will be charged at the lesser allowed rate. Interest begins from the date payment was due. |
Source: Item 6 — OTHER FEES (FDD pages 14–20)
What This Means (2024 FDD)
According to the 2024 Cinch I.T. Franchise Disclosure Document, Cinch I.T. may conduct audits of a franchisee's business. If an audit reveals that the franchisee has underreported their gross sales, Cinch I.T. will charge the franchisee a fee to cover the cost of the audit.
The audit fee is only payable under specific circumstances. Cinch I.T. will charge this fee if the understatement of gross sales is determined to be willful. Additionally, Cinch I.T. will charge the audit fee if the understatement is 2% or more of gross sales for a two-month period.
In addition to the cost of the audit, Cinch I.T. will also charge interest on the underpayment of royalties. This could potentially create a significant financial burden for the franchisee, especially if the underreporting continues for an extended period. Franchisees should ensure accurate reporting to avoid these fees.