How are the audit and recordkeeping costs calculated for a Dq Treat franchise?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount(1) P | Due Date(5) P | Remarks |
|---|---|---|---|
| Audit and Recordkeeping Costs | Your contractual percentage continuing license fees and percentage sales promotion program fees times the amount of understated Gross Sales, plus any other amounts owed to us | After audit revealing understatement of Gross Sales by 3% or more | If an initial evaluation or audit reveals an understatement of Gross Sales by 3% or more, you must pay all costs for the audit, including salaries, outside accountant and attorneys’ fees, copying costs, postage, travel, meals, and lodging (“audit costs”), plus audit costs for any additional audits within 2 years after the initial evaluation or audit. |
Source: Item 6 — Other Fees (FDD pages 20–24)
What This Means (2025 FDD)
According to the 2025 Dq Treat Franchise Disclosure Document, audit and recordkeeping costs are calculated based on a franchisee's underreported gross sales. Specifically, if an audit reveals that a Dq Treat franchisee has understated their Gross Sales by 3% or more, the franchisee is responsible for covering the costs of the audit.
The costs include the contractual percentage continuing license fees and percentage sales promotion program fees times the amount of understated Gross Sales, plus any other amounts owed to Dq Treat. Additionally, the franchisee must pay for all expenses associated with the audit itself. These audit costs encompass a range of items, including salaries, fees for outside accountants and attorneys, copying costs, postage, travel expenses, meals, and lodging.
Furthermore, the Dq Treat franchisee may also be responsible for audit costs associated with any additional audits conducted within a 2-year period following the initial audit if the initial evaluation revealed the understatement of Gross Sales by 3% or more. This highlights the importance of accurate record-keeping and reporting of sales figures to avoid incurring these potentially significant expenses. Franchisees should ensure they have robust accounting practices in place to minimize the risk of understatement and the subsequent financial burden of audit costs.