What costs are included in the reimbursement for an audit or inspection of a Craters & Freighters franchise?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
uch understatement, plus interest at the rate of prime plus five percent (5%) as per the records of any mega national bank from the date originally due until the day of payment. In addition, Franchisee must reimburse Franchisor for the cost of such any such audit or inspection, including, without limitation, any charges incurred by Franchisor relating to fees arising from attorneys, independent accountants, and the travel expenses, room and board, and compensation of Franchisor's employees in the event such audit or inspection is made necessary by any one or more of the following: (1) Franchisee's failure or refusal to furnish reports, supporting records, or any other information as herein required; (2) Franchisee's failure or refusal to furnish such records or other information as herein required; (3) Franchisee's failure or
refusal to furnish such information on a timely basis; (4) if, after receiving advance notice from Franchisor, Franchisee fails or refuses to have the books and records available for such audit or inspection; (5) Franchisee's failure or refusal to cooperate with any such audit or inspection; or (6) any understatement of Adjusted Gross Sales for the period of any audit or inspection is determined by any such audit or inspection to be greater than five percent (5%).
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, if an audit or inspection is required due to specific failures or refusals by the franchisee, the franchisee must reimburse Craters & Freighters for the costs incurred. These costs include charges from attorneys and independent accountants.
In addition to professional fees, the reimbursement also covers the travel expenses, room and board, and compensation of Craters & Freighters' employees involved in the audit or inspection. This means a franchisee could be responsible for covering not only the direct costs of the audit itself but also the indirect costs associated with the time and travel of the franchisor's personnel.
The circumstances that trigger this reimbursement obligation include failing to provide required reports, records, or information; not having books and records available for the audit after receiving notice; refusing to cooperate with the audit; or understating Adjusted Gross Sales by more than 5% during the audited period. These remedies are in addition to any other rights Craters & Freighters may have under the Franchise Agreement or applicable law.