Which section of the City Wide Franchise Agreement addresses the franchisee's obligations concerning inspections and audits?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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).
Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 28–29)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, Section 11.7 of the Franchise Agreement, titled "Inspection Rights of Business Records; Audit; Underpayment and Overpayment," outlines the franchisee's obligations regarding inspections and audits. This section grants City Wide or its representatives the right to examine and copy the franchisee's business records at all reasonable times and at City Wide's expense.
Additionally, City Wide has the right to require franchisees to provide daily electronic access to their business records at reasonable times. City Wide can also conduct independent audits of these records or require franchisees to submit annual audited or reviewed financial statements.
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 legal rate. Furthermore, if the understatement is 2% or more, the franchisee must reimburse City Wide for all costs associated with the audit or inspection, including accounting and attorneys' fees. This section clearly defines the scope and financial responsibilities related to inspections and audits within the City Wide franchise system.