What are some examples of non-compliance that could trigger an audit fee for a Crab N Spice franchise?
Crab_N_Spice Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Our then-current fee, | On demand | If we provide in-person support to you in | |
| plus our expenses. | response to your request, we may charge | ||
| Currently, $500 per | this fee plus any out-of-pocket expenses | ||
| day. | (such as travel, lodging, and meals for | ||
| employees providing onsite support). | |||
| This fee is payable to the Marketing Fund | |||
| if you use unauthorized advertising in | |||
| violation of the terms of the Franchise | |||
| Agreement. | |||
| If you fail a food safety audit, we will | |||
| require you to undergo an additional food | |||
| safety audit at your own expense within | |||
| 45 days. You will pay the third party | |||
| auditor directly upon invoicing. This fee | |||
| is uniformly imposed and is not | |||
| refundable in any circumstances. | |||
| We may take any action we deem | |||
| appropriate to resolve a customer | |||
| complaint about your business. If we | |||
| respond to a customer complaint, we may | |||
| require you to reimburse us for our | |||
| expenses. | |||
| Payable only if (1) we audit you because | |||
| you have failed to submit required reports | |||
| or other non-compliance, or (2) the audit | |||
| concludes that you under-reported gross | |||
| sales b | |||
| period | |||
| Payable only if we conduct an inspection | |||
| of your business because of a | |||
| governmental report, customer complaint | |||
| or other customer feedback, or your | |||
| default or non-compliance with any | |||
| system specification. | |||
| We may cure your non-compliance on | |||
| your behalf (for example, if you do not | |||
| have required insurance, we may purchase | |||
| insurance for you), and you will owe our | |||
| costs plus a 10% administrative fee. | |||
| When transfer | Payable if you sell your business. |
Source: Item 6 — OTHER FEES (FDD pages 11–14)
What This Means (2024 FDD)
According to Crab N Spice's 2024 Franchise Disclosure Document, there are several instances of non-compliance that could trigger an audit fee. Crab N Spice may require a franchisee to pay for an audit if the franchisee fails to submit required reports, engages in other forms of non-compliance, or if an audit reveals that the franchisee under-reported gross sales. Additionally, if Crab N Spice conducts an inspection due to a governmental report, customer complaint, or other customer feedback indicating non-compliance with system specifications, the franchisee may be subject to an audit fee.
Beyond audit fees, franchisees may incur other penalties for non-compliance. If a Crab N Spice business is not in compliance with system specifications or the franchise agreement and fails to correct the issue after 30 days' notice, Crab N Spice may charge the franchisee $500. Furthermore, a charge of $250 per week may be imposed until the non-compliance is corrected. Crab N Spice also retains the right to cure the non-compliance on behalf of the franchisee, such as purchasing required insurance, and then charge the franchisee for the costs incurred plus a 10% administrative fee.
These provisions highlight the importance of adhering to Crab N Spice's standards and requirements. Franchisees should ensure they submit all required reports accurately and on time, maintain compliance with system specifications, and address any customer complaints or feedback promptly to avoid potential audit fees and other penalties. Understanding these potential costs and consequences is crucial for prospective franchisees to assess the financial implications of operating a Crab N Spice franchise.