What records are subject to audit or inspection by Craters & Freighters?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
year, full, complete, and accurate books, records, reports, and accounts relating to the Franchised Business.
12. AUDITS AND INSPECTIONS.
- 12.1 Access to Business Records. Franchisor, any Affiliate of Franchisor, or any designee of Franchisee has the right, at any time during reasonable business hours and without prior notice to Franchisee, to undertake or cause an audit or inspection of the Business Records, accounting records, sales and income tax records and returns, and other records of the Franchised Business and the books and records of any corporations or partnership which have any ownership interest in Franchisee. Franchisee must fully cooperate with Franchisor, any Affiliate of Franchisor, and any designee of Franchisor who is carrying out any such audit or inspection.
- 12.2 Inspections at Premises. To determine whether Franchisee and the Franchised Business are complying with this Agreement and, more specifically, all System Standards, Franchisor, any Affiliate of Franchisor, or any designee of Franchisee has the right at any reasonable time, and without prior notice to Franchisee, to: (1) inspect and photograph the Premises, and (2) interview personnel and customers of the Franchised Business. Franchisee agrees to cooperate fully with Franchisor in connection with any such inspections and interviews, including but not limited to using any evaluation forms and surveys prescribed by Franchisor.
- 12.3 Understatement of Adjusted Gross Sales. In the event any audit or inspection discloses an understatement of the Franchised Business's Adjusted Gross Sales, Franchisee must pay to Franchisor, within fifteen (15) days after receipt of the audit or inspection report, the Royalty Fee and Marketing Fund Contributions due on the amount of such 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;
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, Craters & Freighters, its affiliates, or its designees have the right to audit or inspect various records related to the franchised business. This includes business records, accounting records, sales and income tax records and returns, and other records of the franchised business. The audit can also extend to the books and records of any corporations or partnerships that hold an ownership interest in the franchisee. These audits and inspections can occur at any time during reasonable business hours and without prior notice to the franchisee.
Craters & Freighters requires franchisees to fully cooperate with any audit or inspection conducted by Craters & Freighters, its affiliates, or its designees. If an audit or inspection reveals an understatement of the franchised business's Adjusted Gross Sales, the franchisee is obligated to pay Craters & Freighters the Royalty Fee and Marketing Fund Contributions due on the understated amount. This payment must be made within fifteen days of receiving the audit or inspection report, along with interest calculated at a rate of prime plus five percent from the original due date until the payment date.
Furthermore, the franchisee is responsible for reimbursing Craters & Freighters for the costs associated with any audit or inspection under specific circumstances. These circumstances include failure to furnish required reports, records, or information; failure to provide records on a timely basis; failure to have books and records available after receiving advance notice; failure to cooperate with the audit or inspection; or if the audit reveals an understatement of Adjusted Gross Sales exceeding five percent. These costs may include charges for attorneys, independent accountants, and the travel expenses, room and board, and compensation of Craters & Freighters' employees involved in the audit or inspection.