Is a Fly To Fit franchisee's refusal to cooperate with audits or inspections grounds for termination?

According to Fly To Fit's 2024 Franchise Disclosure Document, a franchisee's refusal to cooperate with audits or inspections is grounds for termination of the franchise agreement. Specifically, if a franchisee refuses to cooperate with or permit any audit or inspection by Fly To Fit or its agents or contractors, or otherwise fails to comply with Section 10.5 or Section 11.2 of the agreement, Fly To Fit has grounds to terminate the agreement. This termination can occur without providing an opportunity for the franchisee to correct the issue.

Fly To Fit retains the right to conduct inspections of the business premises during normal business hours. These inspections may involve observing operations, conducting physical inventories, evaluating conditions, monitoring sales, speaking with employees and customers, and taking samples. Franchisees are obligated to cooperate with these inspections. Fly To Fit may also use videotaping and photography during inspections.

Fly To Fit also has the right to examine and audit all books and records related to the Fly To Fit business at any reasonable time. This includes the right to conduct the audit at the franchise location or require the franchisee to deliver copies of the necessary documentation to a location designated by Fly To Fit. The franchisee may be responsible for reimbursing Fly To Fit for the costs of the audit if the franchisee failed to submit required reports or was otherwise not in compliance with the Fly To Fit system, or if the audit reveals that the franchisee understated gross sales by 3% or more for any 4-week period.

For a prospective Fly To Fit franchisee, this means that compliance with audit and inspection requests is not optional but a mandatory requirement of the franchise agreement. Failure to comply can lead to termination of the agreement without a chance to correct the issue. Franchisees should maintain accurate records and be prepared to provide them for inspection to avoid potential disputes and penalties.