What is the late payment fee for an audit underpayment for a Cr3 American Exteriors franchise?
Cr3_American_Exteriors Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE | AMOUNT | DUE DATE (Note 2) | REMARKS |
|---|---|---|---|
| (Note 1) | |||
| Audit Fee | Cost of audit plus 18% interest per annum on underpayment and $50 per month late payment. | As invoiced | Payable if an audit discloses an under reporting of Gross Revenues or underpayment to us by 2% or more. |
Source: Item 6 — OTHER FEES (FDD pages 18–20)
What This Means (2025 FDD)
According to Cr3 American Exteriors' 2025 Franchise Disclosure Document, if an audit reveals an underreporting of gross revenues or an underpayment by 2% or more, the franchisee is responsible for the cost of the audit. In addition to the audit cost, Cr3 American Exteriors charges 18% interest per annum on the underpayment amount. Furthermore, a late payment fee of $50 per month is applied to any overdue audit fees.
This means that if a Cr3 American Exteriors franchisee's financial records are found to be inaccurate, leading to an underpayment, they will face multiple financial penalties. These penalties include covering the expense of the audit itself, paying a substantial interest rate of 18% annually on the amount that was underpaid, and incurring a fixed monthly late fee of $50 for each month the payment is overdue.
Prospective Cr3 American Exteriors franchisees should ensure they have robust accounting practices in place to accurately track and report their gross revenues and payments to avoid triggering an audit. Understanding these potential audit-related fees is crucial for managing the financial risks associated with operating a Cr3 American Exteriors franchise. Franchisees should maintain meticulous records and seek professional accounting advice to minimize the likelihood of underreporting or underpayment, thereby avoiding these additional costs.