What happens if an inspection of a Crave franchisee's report discloses an understatement of 2% or more?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
We or our designees shall have the right, during normal business hours, to review, audit, examine and copy any or all of your books and records as we may require at the Franchised Business. You shall make such books and records available to us or our designees immediately upon request. If any required Royalty Fee, Brand Development Fee, or other payments due to us are delinquent, or if an inspection should reveal that such payments have been understated in any report to us, then you shall immediately pay to us the amount overdue or understated upon demand with interest determined in accordance with the provisions of Section 4.5. If an inspection discloses an underpayment of amounts owed to us or an understatement in any report of Gross Sales of two percent (2%) or more, you shall, in addition, reimburse us for all costs and expenses connected with the inspection (including, without limitation, reasonable accounting and attorneys' fees). These remedies shall be in addition to any other remedies we may have at law or in equity.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, Crave retains the right to inspect a franchisee's business records during normal business hours. If these inspections reveal that payments, such as Royalty Fees or Brand Development Fees, have been understated in any report to Crave, the franchisee is required to immediately pay the overdue or understated amount upon demand, along with interest as determined by Section 4.5 of the agreement.
Furthermore, if the inspection uncovers an underpayment or an understatement of Gross Sales by two percent (2%) or more, the franchisee is responsible for reimbursing Crave for all costs and expenses associated with the inspection. This includes, but is not limited to, reasonable accounting and attorneys' fees.
These measures are in addition to any other legal or equitable remedies that Crave may pursue. This means that Crave has multiple avenues for recourse if a franchisee is found to have underreported sales or underpaid fees, highlighting the importance of accurate and transparent financial reporting for Crave franchisees.