What costs and expenses will a City Publications franchisee have to reimburse if an inspection discloses an understatement of 3% or more?

According to City Publications' 2025 Franchise Disclosure Document, if a franchisee's payment report is understated by 3% or more and discovered during an inspection, the franchisee must reimburse City Publications for all reasonable costs associated with the inspection. These costs include, but are not limited to, travel expenses, reasonable accounting fees, and legal fees.

This provision in the franchise agreement allows City Publications to recoup expenses incurred when investigating discrepancies in a franchisee's reported sales or payments. The 3% threshold suggests that City Publications is primarily concerned with significant underreporting rather than minor discrepancies.

For a prospective City Publications franchisee, this highlights the importance of accurate record-keeping and transparent reporting of gross sales and fees. Failure to maintain accurate records could lead to an audit, and if the understatement exceeds the 3% threshold, the franchisee will be responsible for covering the costs of the audit itself, in addition to paying the understated amount plus interest.