When is the Cost of Inspection and Audit due for a Fat Shack franchise?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Costs of Inspection and Audit1 | Cost of audit, underpayment amount, late payment charges and interest. Varies according to your location | 15 days after receipt of our notice to you of any underpayment | These costs are payable only if you understate your Gross Sales by more than 2%, do not submit reports to us or do not cooperate in performance of inspection and audit. |
| If you commit an Act of Deception (as defined in Section 16.5 of the Franchise Agreement), minimum of $10,000 | Payable in advance | If you commit an Act of Deception, you must pay us $10,000 immediately upon notice from us to cover the cost of the audit. Any amounts unpaid, unreported or underreported must also be paid in full. |
Source: Item 6 — Other Fees (FDD pages 15–18)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the Cost of Inspection and Audit is due 15 days after receipt of notice of any underpayment. This fee covers the cost of the audit, the underpayment amount, late payment charges, and interest.
This cost is only payable if a Fat Shack franchisee understates their Gross Sales by more than 2%, fails to submit reports, or does not cooperate with the inspection and audit. Additionally, if a franchisee commits an Act of Deception, as defined in the Franchise Agreement, they must pay a minimum of $10,000 immediately upon notice from Fat Shack to cover the cost of the audit. Any unpaid, unreported, or underreported amounts must also be paid in full at that time.
It is important for prospective Fat Shack franchisees to understand the conditions under which these inspection and audit costs are incurred. Maintaining accurate records, submitting timely reports, and cooperating with any audits are crucial to avoid these fees. The potential for a $10,000 charge for an Act of Deception highlights the importance of transparency and honesty in financial reporting.