What is the time period that FSI may audit and inspect documents covering for a Fat Shack Restaurant?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
FSI may audit and inspect documents covering a period beginning with the date on which Franchisee first acquired its FAT SHACK Restaurant and ending on the date such audit is concluded. All documents provided for FSI's inspection or audit must be certified by Franchisee and the appropriate affiliated party, if applicable, as true, complete and correct. Inspections and audits may be conducted following the termination or expiration of this Agreement for any reason. If any inspection or audit discloses a deficiency in amounts of payments owed to FSI pursuant to this Agreement then such amounts will become immediately payable to FSI by Franchisee, with interest and late fees due in accordance with Section 5.4 hereof, except for Acts of Deception which shall be governed by the provisions of Section 16.5 hereof. In addition, if it is found by any inspection or audit that the Gross Sales of its FAT SHACK Restaurant have been understated by 2 percent or more during the period audited, Franchisee must pay all reasonable costs and expenses FSI incurred in connection with the inspection or audit, including the costs and fees of any independent accountant and the travel and living expenses and compensation of any of FSI's employees or agents conducting such inspection or audit.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, FSI has the right to audit and inspect a franchisee's documents. The audit period begins on the date the franchisee first acquired their Fat Shack Restaurant and extends to the date the audit concludes.
This means Fat Shack can review financial records and other relevant documents from the entire period the franchisee has operated the restaurant. This includes ledgers, bank statements, copies of checks, contracts, and any other documents FSI requests. The franchisee must certify that all documents provided are true, complete, and correct.
Fat Shack can conduct these inspections and audits even after the franchise agreement has terminated or expired. If an audit reveals a deficiency in payments owed to FSI, the franchisee must immediately pay the outstanding amount, along with interest and late fees. Furthermore, if the audit discovers that the Gross Sales were understated by 2% or more, the franchisee is responsible for covering all reasonable costs and expenses FSI incurred during the audit.