Can Counselor Realty sue to compel inspections or audits?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
8. FINANCIAL STANDARDS.
- 8.1 Records and Reports. You must keep and give us the information, reports, books and records concerning the Office (including any Additional Office and Extension Office) and Business we specify, on forms or in media we specify periodically. You will allow us to inspect, copy and audit such records, both at the Office (including any Additional Office and Extension Office) and remotely by electronic means. If Franchisee is a partnership, corporation or other entity, you must provide us with copies of Franchisee's organizational documents (including, without limitation, as applicable, its articles of incorporation, bylaws, operating agreement or partnership agreement) and breakdown of ownership. You must report promptly to us any claim involving the Business and any change in the Franchisee's organizational documents.
Source: Item 22 — CONTRACTS (FDD page 32)
What This Means (2025 FDD)
According to Counselor Realty's 2025 Franchise Disclosure Document, franchisees must maintain and provide Counselor Realty with specified information, reports, books, and records concerning their office and business. These records must be kept on specified forms or media. Counselor Realty is permitted to inspect, copy, and audit these records, both at the franchisee's office and remotely via electronic means.
This requirement extends to any Additional Office or Extension Office the franchisee may operate. Additionally, if the franchisee is a partnership, corporation, or other entity, they must provide copies of their organizational documents, including articles of incorporation, bylaws, operating agreements, or partnership agreements, along with a breakdown of ownership. Franchisees are also obligated to promptly report any claims involving the business and any changes to their organizational documents.
While the FDD excerpt confirms Counselor Realty's right to inspect, copy, and audit franchisee records, it does not explicitly state whether Counselor Realty has the right to sue to compel these actions. The agreement mandates that franchisees allow these inspections and audits, implying a legal obligation to comply. However, the specific legal recourse available to Counselor Realty in case of non-compliance (such as the ability to sue to compel inspections) is not detailed in this section.
A prospective franchisee should seek clarification from Counselor Realty regarding the specific legal actions the company can take to enforce its audit and inspection rights. Understanding the potential legal ramifications of non-compliance is crucial for making an informed investment decision.