Under what circumstances must a Fly To Fit franchisee reimburse Fly To Fit Franchise for the costs of an audit?

According to Fly To Fit's 2024 Franchise Disclosure Document, a franchisee may have to reimburse Fly To Fit for the costs and expenses of an audit under specific circumstances. Fly To Fit has the right to examine and audit a franchisee's business records at any reasonable time, either at the franchise location or by requiring the franchisee to deliver copies of the records to a designated location.

A Fly To Fit franchisee is required to reimburse Fly To Fit for all costs and expenses associated with the audit if either of two conditions are met. First, if Fly To Fit conducts the audit because the franchisee failed to submit required reports or was otherwise not in compliance with the Fly To Fit system, the franchisee must cover the audit costs. Second, if the audit reveals that the franchisee understated Gross Sales by 3% or more for any 4-week period, the franchisee is responsible for reimbursing Fly To Fit for the audit expenses.

This policy ensures that Fly To Fit franchisees maintain accurate records and comply with reporting requirements. It also protects Fly To Fit from potential revenue loss due to underreported sales. For a prospective franchisee, this means maintaining meticulous records and adhering to all reporting requirements is crucial to avoid incurring audit costs. The 3% threshold for understated sales provides a specific benchmark for franchisees to be aware of, and exceeding this threshold can trigger financial consequences.