Does City Wide have the right to audit a City Wide franchisee's Business Records?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
tivity report for the preceding month in a form approved by CITY WIDE, and as further set forth in the Operating Manual.
- 11.6 Local Advertising Report. Upon request, Franchisee shall deliver quarterly to CITY WIDE, no later than fifteen (15) days after the end of each of Franchisee's fiscal quarters, a report of the local advertising funds Franchisee spent, along with such supporting materials as may be required by CITY WIDE, on a form approved by CITY WIDE, for the preceding quarter's local advertising.
- 11.7 Inspection Rights of Business Records; Audit; Underpayment and Overpayment. CITY WIDE or its Representative (as defined in Section 16) will have the right at all reasonable times to examine and copy, at its expense, the Business Records. CITY WIDE may, at its sole and absolute right, require Franchisee to allow CITY WIDE daily access to the Business Records at reasonable times via electronic means. 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). The foregoing remedies will be in addition to any other remedies CITY WIDE may have. Any overpayment of any amounts by Franchisee to CITY WIDE discovered by such inspection will be credited by CITY WIDE against future amounts payable by Franchisee to CITY WIDE under this Agreement.
- 11.8 Inspection Rights regarding Franchisee Records.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, City Wide has extensive rights to inspect and audit a franchisee's business records. City Wide or its representative can examine and copy the Business Records at all reasonable times and at City Wide's expense. City Wide can also require daily electronic access to these records at reasonable times. Furthermore, City Wide has the right to conduct independent audits of the Business Records or demand annual audited or reviewed financial statements from the franchisee.
If 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. If the understatement is two percent (2%) or more, the franchisee must also reimburse City Wide for all costs and expenses associated with the audit or inspection, including accounting and attorneys' fees.
To ensure compliance with the Franchise Agreement, City Wide and its representatives have full access to inspect the Franchised Business and all Business Records during regular business hours, with or without notice. This includes records related to the franchisee's suppliers, employees, and agents. The franchisee is required to cooperate fully with City Wide during these inspections, which City Wide agrees to conduct in a manner that does not unduly disrupt the Franchised Business.
These audit and inspection rights are in place to ensure that City Wide franchisees are operating in accordance with the standards and policies of the City Wide system, maintaining the integrity of the brand, and accurately reporting financial information. Prospective franchisees should be aware of these obligations and ensure they have systems in place to maintain accurate and accessible records.