What is the franchisee's obligation if a Floors To Go audit reveals a deficiency of 2% or more?
Floors_To_Go Franchise · 2025 FDDAnswer from 2025 FDD Document
t include sales and use taxes, and refunds.
- (7) FTG has the right to audit your books and records relating to your commitment to purchase, for each of your Showrooms, $350,000 or 80% of your total floor covering and window treatment purchases, whichever is greater, through the FTG Marketing System during the calendar year following the opening of each such Showroom. If an inspection discloses a deficiency of two percent (2%) or more, you agree to reimburse FTG for all costs and expenses connected with such audit (including, without limit
Source: Item 6 — OTHER FEES (FDD pages 12–14)
What This Means (2025 FDD)
According to the 2025 Floors To Go Franchise Disclosure Document, if an audit reveals a deficiency of 2% or more in the franchisee's commitment to purchase $350,000 or 80% of their total floor covering and window treatment purchases through the FTG Marketing System, the franchisee must reimburse Floors To Go for all costs and expenses connected with the audit. These costs include, but are not limited to, reasonable accounting and attorneys' fees.
This means that Floors To Go franchisees must accurately track and report their purchases through the FTG Marketing System. Failure to meet the purchase commitment and underreporting by 2% or more can trigger an audit, the cost of which the franchisee will bear. This creates a financial risk for franchisees who do not diligently manage their purchasing and reporting processes.
Franchisees should maintain meticulous records of all purchases made through the FTG Marketing System to avoid any discrepancies. They should also be prepared to cover the costs of an audit, including accounting and legal fees, if a significant deficiency is discovered. This requirement underscores the importance of adhering to the franchisor's purchasing guidelines and maintaining transparent financial practices.