What is the auditor's responsibility in evaluating accounting policies used by Cool Binz?
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.
Furthermore, if we conduct an inspection or audit due to your failure to (a) furnish reports, supporting records, or other information as required, (b) furnish these items on a timely basis, (c) to record all Customer payments in the COOL BINZ Software within 48 hours of their receipt, or (d) use the COOL BINZ/Required Software for scheduling or invoicing, or we discover that an understatement of Royalty is greater than 3% for any period reviewed, you must reimburse us for the cost of the inspection and/or audit, including without limitation, the charges of attorneys and independent accountants, the travel, room and board expenses, and compensation of our employees. Further, if an understatement of the Royalty is greater than 3%, you also must pay us an additional penalty fee equal to 10% of the total amount of the understated Gross Sales.
These remedies are in addition to our other remedies and rights under this Agreement and applicable law.
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
Based on the 2025 Cool Binz Franchise Disclosure Document, the franchisor retains the right to audit a franchisee's financial records. Cool Binz has the right 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 at any time during business hours, without prior notice to the franchisee. The franchisee must fully cooperate with Cool Binz representatives and any independent accountants hired to conduct the inspection or audit.
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, plus interest at a rate of 18% per annum (or the maximum rate permitted by law) and all late fees, from the original due date until payment. Furthermore, if the inspection or audit is triggered by the franchisee's failure to furnish reports or records, failure to record customer payments in the Cool Binz software within 48 hours, or failure to use the Cool Binz/Required Software for scheduling or invoicing, or if the understatement of Royalty exceeds 3% for any period reviewed, the franchisee must reimburse Cool Binz for the cost of the inspection and/or audit. This reimbursement includes charges for attorneys and independent accountants, travel, room and board expenses, and compensation for Cool Binz employees.
Additionally, if the understatement of Royalty is greater than 3%, the franchisee must pay Cool Binz an additional penalty fee equal to 10% of the total amount of the understated Gross Sales. These remedies are in addition to any other rights and remedies Cool Binz has under the Franchise Agreement and applicable law. Cool Binz also requires franchisees to use designated accounting software, currently QuickBooks Online, and to follow a specified Chart of Accounts, which Cool Binz has the right to change at its discretion. Cool Binz will have automatic password access to the franchisee's financial reports on this system.