What triggers the obligation to pay Expense Reduction Analysts' cost of audit?
Expense_Reduction_Analysts Franchise · 2025 FDDAnswer from 2025 FDD Document
| NAME OF FEE1 | AMOUNT OR FORMULA | DUE DATE | REMARKS |
|---|---|---|---|
| Our Cost of Audit | Our out-of-pocket expense | Upon invoice | You pay our cost of audit only if the audit showed that your Net Cumulative Receipts were understated by 2% or more, or if the audit was necessary because you did not submit required financial reports to us. |
Source: Item 6 — OTHER FEES (FDD pages 13–19)
What This Means (2025 FDD)
According to Expense Reduction Analysts' 2025 Franchise Disclosure Document, franchisees may be required to pay for the cost of an audit under specific circumstances. Expense Reduction Analysts will invoice the franchisee for the out-of-pocket expenses incurred for the audit.
The obligation to pay arises if the audit reveals that the franchisee understated their Net Cumulative Receipts by 2% or more. Additionally, Expense Reduction Analysts may require the franchisee to cover the audit costs if the franchisee failed to submit the required financial reports to Expense Reduction Analysts in the first place, necessitating the audit.
This policy ensures that Expense Reduction Analysts can verify the accuracy of reported revenues and maintain financial accountability within the franchise system. For a prospective franchisee, this highlights the importance of accurate record-keeping and timely submission of financial reports to avoid potential audit costs. Franchisees should maintain meticulous records and adhere to all reporting requirements to minimize the risk of triggering an audit and incurring additional expenses.