What is City Publications permitted to observe regarding a franchisee's business operations during an inspection?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor or its designated agents shall have the right at all reasonable times to examine and copy, at Franchisor's expense, the books, records and tax returns of Franchisee. In addition, the same shall have the right to interview customers, employees, vendors and/or suppliers and at any time, to have an independent audit made of Franchisee's books and records at Franchisor's expense. If an inspection should reveal that the Gross Sales or any fees or payments to Franchisor have been understated in any report to Franchisor, then Franchisee shall immediately pay to Franchisor the amount understated plus interest from the date such amount was due until paid, at the rate of one and one-half percent (1.5%) per month or the maximum rate permitted by law. If an inspection discloses an understatement in any payment report of three percent (3%) or more, Franchisee shall, in addition, reimburse Franchisor for any and all reasonable costs and expenses in connection with the inspection including, without limitation, travel expenses, reasonable accounting and legal fees. The foregoing remedies shall be in addition to any other remedies Franchisor may have.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications's 2025 Franchise Disclosure Document, City Publications has the right to inspect a franchisee's business operations. City Publications, or its designated agents, can examine and copy the franchisee's books, records, and tax returns at all reasonable times, with City Publications bearing the expense of these activities. They also have the right to interview customers, employees, vendors, and/or suppliers.
Furthermore, City Publications can conduct an independent audit of the franchisee's books and records, again at City Publications's expense. If such an inspection reveals that the franchisee has understated gross sales or any fees or payments to City Publications, the franchisee must immediately pay the understated amount plus interest, calculated at 1.5% per month or the maximum rate permitted by law, from the date the amount was originally due.
If the inspection uncovers an understatement of 3% or more in any payment report, the franchisee is also responsible for reimbursing City Publications for all reasonable costs and expenses associated with the inspection. This includes travel expenses, as well as reasonable accounting and legal fees. These remedies are in addition to any other remedies that City Publications may legally pursue.