When is the Audit fee due for a Deer Solution franchisee?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
| Reporting Non-Compliance | $150 per occurrence | 14 days of invoice | Payable for failure to timely submit Royalty and Activity Reports, and other reports and financial statements as required under Franchise Agreement. |
|---|---|---|---|
| Operations Non-Compliance | $450 to $1,000 per occurrence | 14 days of invoice | Payable for failure to comply with operational standards as required and specified under Franchise Agreement, plus inspection and re- inspection costs incurred by us. |
| Payment Non-Compliance | $150 per occurrence | Payable for failure to timely pay, when due, a fee or payment due to us under the Franchise Agreement, plus interest, costs, and legal fees. | |
| Non-Compliance | Actual fees, costs, and expenses | On demand | Fees, costs, and expenses incurred by us as a result of your breach or non- compliance with the terms of your Franchise Agreement. |
| Legal Fees and Expenses | Costs and expenses | As incurred | This fee includes, but is not limited to, attorneys’ fees for any failure to pay amounts when due or failure to comply in any way with the Franchise Agreement. |
| Audit | Cost of audit | On demand | For costs incurred by us for each financial audit, provided the audit determines underreporting of 2% or greater during any designated audit period. Includes fees incurred by us including audit, legal, travel and reasonable accommodations. |
Source: Item 6 — OTHER FEES (FDD pages 14–19)
What This Means (2025 FDD)
According to Deer Solution's 2025 Franchise Disclosure Document, an audit fee is due 'on demand.' This means that if Deer Solution conducts a financial audit of a franchisee's business and discovers underreporting of 2% or greater during any audit period, the franchisee is responsible for covering the cost of the audit. These costs can include audit fees, legal expenses, travel, and reasonable accommodations incurred by Deer Solution.
This fee is only applicable if the audit reveals a significant underreporting of revenue. The audit itself is triggered if Deer Solution suspects financial discrepancies. The phrase 'on demand' indicates that Deer Solution can request immediate payment for these audit-related costs once they are incurred and the underreporting is confirmed.
For a prospective Deer Solution franchisee, this highlights the importance of maintaining accurate and transparent financial records. Underreporting, even unintentionally, can lead to a costly audit. Franchisees should ensure they have robust accounting practices in place to avoid any discrepancies that could trigger an audit and the associated fees. This is a fairly standard practice in franchising, as franchisors need to ensure accurate royalty payments and maintain the integrity of the brand's financial performance.