Under what conditions would a Degree Wellness franchisee be required to pay audit expenses?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
us or our affiliates. |
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Audit Expenses | Cost of audit and inspection (currently $1,200), plus any reasonable accounting and legal expenses | On demand | Payable if Continuing Franchise Fee or Fund contribution is understated by 2% or more, or you fail |
Source: Item 6 — Other Fees (FDD pages 14–21)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, a franchisee may incur audit expenses under specific circumstances related to financial reporting and fee payments. These expenses cover the cost of the audit and inspection, currently at $1,200, in addition to any reasonable accounting and legal fees that may arise during the process.
A Degree Wellness franchisee becomes liable for these audit expenses if they understate their Continuing Franchise Fee or Fund contribution by 2% or more. This condition underscores the importance of accurate financial reporting and diligent calculation of fees owed to the franchisor. Franchisees should ensure their accounting practices are thorough and transparent to avoid triggering an audit.
Additionally, a Degree Wellness franchisee will be responsible for audit expenses if they fail to submit the required reports or financial statements. Timely and accurate submission of financial data is crucial for maintaining compliance with the franchise agreement. This requirement highlights the need for franchisees to establish efficient systems for tracking and reporting financial information to Degree Wellness. Failing to meet these obligations can lead to additional costs and potential scrutiny from the franchisor.