What happens if a Crown Gold Exchange franchisee under-reports gross sales?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Our actual costs | 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 |
Source: Item 6 — OTHER FEES (FDD pages 10–12)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, if an audit concludes that a franchisee has under-reported gross sales, the franchisee will be responsible for covering the costs associated with the audit.
It is important to note that Crown Gold Exchange defines "Gross Sales" in the franchise agreement as the total dollar amount of all sales generated through your business for a given period, including payment for any services or products sold by you, whether for cash or credit. Gross Sales does not include (i) bona fide refunds to customers, (ii) sales taxes collected, (iii) sale of used equipment not in the ordinary course of business, or (iv) sales of prepaid cards or similar products (but the redemption of any such card or product will be included in Gross Sales).
This policy incentivizes accurate reporting of sales figures. Franchisees should maintain meticulous records and ensure full compliance with reporting requirements to avoid triggering an audit and incurring these additional expenses. This is a fairly standard practice in franchising, as franchisors rely on accurate gross sales figures to calculate royalties and assess the overall performance of the franchise system.