Can City Wide require a City Wide franchisee to submit annual audited reports?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
CITY WIDE will also have the right, at any time, to have an independent audit made of such Business Records or require Franchisee to submit annual audited or reviewed financial statements.
If an audit or inspection should reveal that any payments to CITY WIDE have been understated in any report to CITY WIDE, then Franchisee will immediately pay CITY WIDE, upon demand, the understated amount plus interest at the maximum rate permitted by law, from the date such amount was due until paid.
If an audit or inspection discloses an understatement of any such payment of two percent (2%) or more, then in addition, Franchisee will also reimburse CITY WIDE for all costs and expenses connected with the audit or inspection (including, without limitation, reasonable accounting and attorneys' fees).
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, City Wide has the right to require franchisees to submit annual audited or reviewed financial statements. This means that as a City Wide franchisee, you could be required to provide either an audited financial statement (a more rigorous and expensive process) or a reviewed financial statement (a less intensive process) on an annual basis.
City Wide also has the right to conduct an independent audit of the franchisee's business records at any time. If such an audit or inspection reveals that payments to City Wide have been understated, the franchisee must immediately pay the understated amount plus interest at the maximum rate permitted by law.
Furthermore, if the understatement is two percent or more, the franchisee will also be responsible for reimbursing City Wide for all costs and expenses associated with the audit or inspection, including accounting and attorneys' fees. This provision incentivizes franchisees to maintain accurate records and make timely and accurate payments to City Wide, as inaccuracies can lead to significant financial penalties.