What is the auditor's responsibility regarding the design of audit procedures for 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.
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the FDD does not specify the auditor's responsibility regarding the design of audit procedures for Cool Binz. However, the document does state that Cool Binz has the right to audit franchisees.
Cool Binz has the right to inspect and audit a franchisee's financial statements, reports, income tax records, sales tax records, payroll records, software databases, and other records at any time during business hours and without prior notice. The franchisee must cooperate fully with Cool Binz's representatives and independent accountants during any inspection or audit.
The FDD also states that if an inspection or 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 applicable law, whichever is lesser, and all late fees, from the date originally due until the date of payment. A prospective franchisee should inquire with Cool Binz about the specific procedures and standards that their auditors follow.