If an audit reveals an understatement of 5% or more of the amount due to Dryject, what are the consequences for the franchisee?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) You shall also permit accountants designated by Us to audit Your books of accounts. In the event that We find that You have understated the amount due to Us and that any such understatement has been made deliberately, such understatement shall constitute an Event of Default and be considered a Material Breach of this Agreement as defined in Section 32(d)(iv) of this Agreement. Should any audit reveal an understatement of five percent (5%) or more of the amount otherwise due to Us, or if the understatement is determined to be deliberate, You will bear the costs and expenses of Our audit and inspection, and the deficiency shall be immediately due and payable with interest from the date the payments should have been made.
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to Dryject's 2025 Franchise Disclosure Document, if an audit reveals that a franchisee has understated the amount due to Dryject by 5% or more, or if the understatement is determined to be deliberate, the franchisee will face specific consequences.
The franchisee is responsible for covering the costs and expenses associated with Dryject's audit and inspection. Additionally, the amount that was originally understated becomes immediately due and payable. Interest will be applied to the deficiency, calculated from the date the payments should have been made.
Furthermore, if the understatement is found to be deliberate, it constitutes an Event of Default and is considered a Material Breach of the Franchise Agreement. This could potentially lead to further penalties or termination of the franchise agreement, as outlined in Section 32(d)(iv).