Under what conditions will a Degree Wellness franchisee be required to reimburse Degree Wellness for the cost of an inspection or audit?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
within 20 days of the date of the request. If the inspection or audit is necessary because of your failure to furnish any reports, supporting records, other information or financial statements as required by this Agreement, or to furnish such reports, records, information, or financial statements on a timely basis, or if an understatement of gross revenues for any period is determined by an audit or inspection to be greater than two percent (2%), then you agree to reimburse us for the cost of such inspection or audit, including without limitation any attorneys' fees and/or accountants' fees we may incur, and the travel expenses, room and board, and applicable per diem charges for our employees. If an understatement of gross revenues for any period is determined by an audit or inspection to be greater than five percent (5%), then, in addition to any other remedies we may have, we may immediately terminate this Agreement upon notice to you, without any right to cure (see Section 15.1). The above remedies are in addition to all our other remedies and rights under this Agreement or under applicable law.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, a franchisee may have to reimburse Degree Wellness for the cost of an inspection or audit under specific circumstances. If an inspection or audit is conducted because the franchisee failed to provide required reports, supporting records, information, or financial statements in a timely manner, the franchisee is responsible for covering the expenses. This includes situations where the franchisee didn't furnish the necessary documents at all or was late in providing them.
Additionally, if an audit or inspection reveals that the franchisee understated their gross revenues by more than two percent (2%), they must reimburse Degree Wellness for the cost of the audit or inspection. This reimbursement covers all associated costs, such as attorney's fees, accountant's fees, travel expenses, room and board, and per diem charges for Degree Wellness employees involved in the process.
Furthermore, if the understatement of gross revenues exceeds five percent (5%), Degree Wellness has the right to terminate the Franchise Agreement immediately upon notice, without allowing the franchisee an opportunity to correct the issue. This is in addition to any other legal remedies Degree Wellness may pursue. These financial and compliance stipulations are designed to ensure accurate reporting and adherence to the franchise agreement, with significant financial consequences for franchisees who fail to meet these obligations.