What is the gross sales understatement threshold that triggers a reimbursement obligation for a Crave Cookies franchisee after an audit?

According to Crave Cookies's 2025 Franchise Disclosure Document, a franchisee may be required to reimburse Crave Cookies for the costs of an audit if the audit reveals that the franchisee understated gross sales by a specific percentage.

Specifically, if an audit of a Crave Cookies franchise reveals that the franchisee understated their gross sales by 3% or more for any 4-week period, the franchisee is obligated to reimburse Crave Cookies Franchising for all costs and expenses associated with the audit. This provision encourages accurate reporting of sales figures and ensures that Crave Cookies receives the correct royalty and marketing fund contributions, which are based on a percentage of gross sales.

This policy is fairly standard in franchising, as franchisors rely on accurate sales reporting to calculate royalties and marketing contributions. Franchisees should maintain meticulous records and ensure accurate reporting to avoid triggering an audit and potential reimbursement obligations. Failing to accurately report sales not only leads to financial penalties but can also be a breach of the franchise agreement, potentially leading to further consequences.