What is the deadline for paying understated amounts discovered during a Clean Your Dirty Face audit?
Clean_Your_Dirty_Face Franchise · 2025 FDDAnswer from 2025 FDD Document
If any examination discloses an understatement of your Business's Gross Sales, you agree to pay us the Royalty, Marketing Fund Contributions, and any other fees understated, plus interest on the understated amounts from the date originally due until the date of payment, within fifteen (15) days after receiving the examination report. Furthermore, if an examination is necessary due to your failure to furnish reports, supporting records, or other information as required, or to furnish these items on a timely basis, or if our examination reveals an understatement of Gross Sales exceeding three percent (3%) of the amount that you actually reported to us for the period examined, you agree to reimburse us for the costs of the examination, including the charges of attorneys and independent accountants and the travel expenses, room and board, and compensation of our employees. These remedies are in addition to our other remedies and rights under this Agreement and applicable law.
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to Clean Your Dirty Face's 2025 Franchise Disclosure Document, if an audit reveals that a franchisee has understated their Gross Sales, they are required to pay the understated Royalty, Marketing Fund Contributions, and any other fees. This payment must include interest on the understated amounts, calculated from the original due date until the date the payment is made. The franchisee has fifteen (15) days after receiving the examination report to remit this payment.
In addition to paying the understated amounts and interest, Clean Your Dirty Face franchisees may also be responsible for covering the costs of the audit itself under certain conditions. Specifically, if the audit was necessary because the franchisee failed to provide required reports, supporting records, or other information on time, or if the audit reveals that the understatement of Gross Sales exceeds three percent (3%) of the amount originally reported, the franchisee must reimburse Clean Your Dirty Face for the expenses incurred during the examination. These expenses can include charges from attorneys and independent accountants, as well as travel, lodging, and compensation for Clean Your Dirty Face employees involved in the audit.
This policy underscores the importance of accurate and timely reporting of Gross Sales by Clean Your Dirty Face franchisees. Failure to comply with reporting requirements or significant underreporting can lead to financial penalties beyond the initial understated amounts. The potential for interest charges and audit cost reimbursement adds a layer of financial risk for franchisees who do not maintain accurate records or fail to report sales correctly. Clean Your Dirty Face retains other remedies and rights under the Franchise Agreement and applicable law.