What costs are included in the Audit fee 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, the audit fee covers specific costs incurred by Deer Solution should a financial audit reveal underreporting of 2% or greater during any designated audit period. These costs encompass audit fees, legal fees, travel expenses, and reasonable accommodations. The audit fee is payable on demand.
This means that if Deer Solution suspects a franchisee of underreporting their gross sales by 2% or more, they can conduct a financial audit at the franchisee's expense. The franchisee will be responsible for covering not only the direct costs of the audit itself but also any legal fees Deer Solution incurs, as well as travel and accommodation expenses for the auditors.
This policy incentivizes Deer Solution franchisees to maintain accurate and transparent financial records. Franchisees should ensure they have robust accounting practices in place to avoid any discrepancies that could trigger an audit and the associated costs. It is also important to note that the audit fee is only applicable if the audit confirms underreporting of 2% or greater, providing a threshold for when these costs can be imposed.