What happens if a Degree Wellness franchisee under-reports gross revenues by more than 5%?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- i. if you under-report gross revenues for any period, as determined by an audit or inspection, in an amount greater than five percent (5%);
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, under-reporting gross revenues by more than 5% constitutes a breach of the franchise agreement. Specifically, if an audit or inspection reveals that a franchisee has under-reported gross revenues by more than 5% for any period, it can be grounds for termination of the franchise agreement.
This provision underscores the importance of accurate financial reporting by Degree Wellness franchisees. Franchise agreements typically require franchisees to report their gross revenues accurately because royalty fees are often calculated as a percentage of these revenues. Under-reporting revenues not only deprives the franchisor of its rightful fees but also violates the terms of the franchise agreement.
For a prospective Degree Wellness franchisee, this means maintaining meticulous records and ensuring accurate reporting of all gross revenues. The franchisee should implement robust accounting practices and consider regular audits to avoid unintentional errors. Understanding the potential consequences of under-reporting, including possible termination of the franchise agreement, is crucial for any franchisee to ensure compliance and maintain a healthy relationship with Degree Wellness.