Under what conditions must a franchisee pay for the cost of an audit by Expense Reduction Analysts?
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's 2025 Franchise Disclosure Document, a franchisee is responsible for covering the costs of an audit conducted by Expense Reduction Analysts under specific circumstances. These circumstances arise if the audit reveals that the franchisee's Net Cumulative Receipts were understated by 2% or more. Additionally, the franchisee is liable for the audit costs if the audit was necessitated by the franchisee's failure to submit the required financial reports to Expense Reduction Analysts.
In practical terms, this means that Expense Reduction Analysts franchisees must maintain accurate and transparent financial records. Understating revenue, even unintentionally, by more than 2% can trigger an audit at the franchisee's expense. Similarly, consistently failing to submit required financial reports will also lead to an audit for which the franchisee must pay.
This policy incentivizes franchisees to be diligent in their financial reporting and to ensure compliance with Expense Reduction Analysts's reporting requirements. Franchisees should implement robust accounting practices and internal controls to minimize the risk of errors or omissions in their financial statements. Paying close attention to these details can help franchisees avoid the financial burden of an audit and maintain a positive relationship with Expense Reduction Analysts.