What rights does Cool Binz have to inspect a franchisee's business?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
8. INSPECTIONS AND AUDITS.
A. OUR RIGHT TO INSPECT THE BUSINESS.
To determine whether you are complying with this Agreement and all System Standards, we have the right at any time during business hours to perform an on-site inspection of your business at your Office Site, and any other locations through which the COOL BINZ Business is operated. During such inspection, we may: (i) participate in quality checks of home field services; (ii) interview employees; or (iii) review (a) your books and records, (b) your promotional materials and media advertising, (c) your personnel files and practices, and/or (d) any and all components of the COOL BINZ Business. You shall permit us or our designee, at our expense, to observe the COOL BINZ Business for purposes of taking photographs, slides, drawings, or other such images ("pictures") of the COOL BINZ Business. You agree that we, or our affiliates, may use the pictures for publicity and other legal purposes without any remuneration to you in connection with the use of the pictures.
You must cooperate fully with us in any inspection of your COOL BINZ Business, and we must use our best efforts to not interfere with the operation of your COOL BINZ Business.
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)
According to Cool Binz's 2025 Franchise Disclosure Document, Cool Binz retains the right to inspect a franchisee's business to ensure compliance with the Franchise Agreement and System Standards. Cool Binz can perform on-site inspections during business hours at the franchisee's Office Site and any other locations where the Cool Binz Business is operated.
During an inspection, Cool Binz may participate in quality checks of home field services, interview employees, and review books, records, promotional materials, media advertising, personnel files, and practices, as well as any components of the Cool Binz Business. Cool Binz, or its designee, can observe the Cool Binz Business and take photographs or other images for publicity and legal purposes without providing remuneration to the franchisee.
Cool Binz also has the right to inspect and audit 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. 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 law) and all late fees.
These inspection and audit rights are typical in franchising, allowing Cool Binz to protect its brand standards, ensure financial accuracy, and verify franchisee compliance. Prospective franchisees should understand that these inspections are a condition of the franchise agreement and that cooperation is required. The potential financial penalties for underreporting sales underscore the importance of maintaining accurate records.