What is the auditor's responsibility regarding the examination of evidence related to amounts and disclosures in Cool Binz's financial statements?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
8. INSPECTIONS AND AUDITS.
B. OUR RIGHT TO AUDIT.
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 Cool Binz Franchise Disclosure Document, Cool Binz retains the right to inspect and audit a franchisee's financial records. Cool Binz can conduct these audits themselves or hire independent accountants to do so. Franchisees must fully cooperate with Cool Binz's representatives and any independent accountants during these inspections or audits.
Cool Binz can perform these audits at any time during business hours and without prior notice to the franchisee. The scope of the audit includes all financial statements, reports, income tax records, sales tax records, payroll records, software databases, and other records. This broad access allows Cool Binz to verify the accuracy of reported gross sales and other financial data.
If an audit reveals an understatement of Gross Sales, Cool Binz has the right to debit the franchisee's account for the unpaid Royalty and Brand Marketing Fees on the understated amount. Additionally, Cool Binz will charge interest on the underpayment at a rate of 18% per annum, or the maximum rate permitted by law, along with any applicable late fees, calculated from the original due date until the date of payment. This provision creates a significant financial risk for franchisees who fail to accurately report their Gross Sales.