Under what financial condition will a Face Foundrie franchisee be required to pay for an audit?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
w products or inspecting new suppliers you recommend. See Note 7. | | Type of Fee | Amount | Due Date | Remarks (See Note 1) | | |-----------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--| | AUDIT EXPENSES | The actual cost of the audit, which will vary under the circumstances. | Upon demand. | Due if audit of your books shows an understatement of your total amount owed to us for any reporting period of 2% or more, or if the audit is needed because you failed to follow our reporting requirements. See Note 8.
Source: Item 6 — OTHER FEES (FDD pages 15–22)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, a franchisee will be responsible for covering the expenses of an audit if the audit reveals an understatement of 2% or more in the total amount owed to Face Foundrie during the audited period. Additionally, the franchisee is responsible for audit costs if the audit is required because the franchisee did not adhere to Face Foundrie's reporting requirements.
The audit expenses that the franchisee would be responsible for include the actual costs incurred by Face Foundrie to conduct the audit. This includes expenses related to travel, lodging, meals, and compensation for the auditing personnel who may travel to the franchisee's Facial Bar. The exact cost of the audit can vary significantly depending on factors such as the condition and accuracy of the franchisee's recordkeeping, the extent of their cooperation during the audit, the number of years of accounting records reviewed, and other specific circumstances related to the audit.
Because the cost of the audit depends on many factors, Face Foundrie is unable to provide an estimated range for these costs. However, the FDD states that the audit expenses will not exceed Face Foundrie's actual costs. This means a Face Foundrie franchisee needs to maintain accurate financial records and comply with all reporting requirements to avoid potentially significant audit expenses.