What actions are Cool Binz franchisees required to take to cooperate with an audit?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
We have the right at any time during business hours, and without prior notice to you, to inspect and audit, or cause to be inspected and audited, any and all financial statements, reports, income tax records, sales tax records, payroll records, software databases, and other records. You must cooperate fully with our representatives and independent accountants we hire to conduct any inspection or audit.
If any inspection or audit discloses an understatement of Gross Sales, we can debit your account, as provided in Sections 2.C and 2.H of this Agreement, for the Royalty and Brand Marketing Fees which are due on the amount of the understatement, plus interest, at the rate of 18% per annum or the maximum rate permitted by applicable law, whichever is lesser, and all late fees, from the date originally due until the date of payment.
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, franchisees must fully cooperate with Cool Binz's representatives and independent accountants during any inspection or audit. This cooperation is required when Cool Binz inspects and audits financial statements, reports, income tax records, sales tax records, payroll records, software databases, and other records. Cool Binz has the right to conduct these audits at any time during business hours and without prior notice to the franchisee.
If an audit reveals an understatement of Gross Sales, Cool Binz can debit the franchisee's account for the Royalty and Brand Marketing Fees due on the understated amount. This debit will also include interest, calculated at 18% per annum or the maximum rate permitted by law, whichever is less, along with all late fees, from the original due date until the payment date.
This clause highlights the importance of maintaining accurate and transparent financial records as a Cool Binz franchisee. The potential for unannounced audits and the imposition of interest and late fees for underreported sales underscore the need for franchisees to adhere strictly to Cool Binz's accounting and reporting standards. Franchisees should ensure they understand and implement the designated accounting software and chart of accounts as specified by Cool Binz to facilitate compliance and avoid potential penalties.