Under what financial threshold related to understatement of amounts due to Dryject will the franchisee bear the costs and expenses of the audit and inspection?
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, a franchisee will bear the costs and expenses of an audit and inspection if they have understated the amount due to Dryject by a certain threshold. Specifically, if an audit reveals an understatement of five percent (5%) or more of the amount otherwise due, the franchisee is responsible for covering the costs and expenses associated with the audit and inspection.
In addition to the financial threshold, the franchisee will also bear the costs of the audit and inspection if the understatement is determined to be deliberate, regardless of the percentage. This implies that Dryject places a high importance on accurate reporting and transparency in financial matters.
Furthermore, if the franchisee is responsible for the audit costs due to an understatement, the deficiency, along with interest from the date the payments should have been made, becomes immediately due and payable. This provision incentivizes franchisees to ensure accurate financial reporting and timely payments to avoid potential financial penalties and audit-related expenses.