Has GMI audited any Gokhale Method franchisees to date?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
We have not audited any franchisees to date and do not know the cost that would be incurred by a franchisee who had under-reported revenue.
Under the franchise agreement, if a franchisee underreports revenue in an amount in excess of 2 percent, the franchisee must pay the costs of the audit, which include the fees of the auditors, travel, meals and lodging for them and any other costs incurred with obtaining and performing the audit.
Based upon our current knowledge of auditors' hourly rates, and depending upon the time required for the audit and whether travel to your place of business would be necessary, the audit cost could range from several hundred dollars to several thousand dollars.
Source: Item 6 — OTHER FEES (FDD pages 11–13)
What This Means (2024 FDD)
According to Gokhale Method's 2024 Franchise Disclosure Document, GMI has not audited any of its franchisees to date. As stated in Item 6, GMI also does not know the potential costs a franchisee would incur if they under-reported revenue.
However, the FDD does outline the conditions under which an audit may occur and who bears the cost. If a Gokhale Method franchisee underreports revenue by more than 2%, they are responsible for covering the expenses of the audit. These costs encompass auditor fees, travel, meals, lodging, and any other expenses related to conducting the audit.
The FDD estimates that audit costs could range from several hundred to several thousand dollars, depending on the time required and the necessity of travel to the franchisee's business location. This lack of audit history may present both an opportunity and a risk for potential franchisees. While there's no precedent of audits, franchisees should maintain accurate records to avoid potential audit costs if underreporting exceeds the 2% threshold.