With whom is the auditor required to communicate regarding the audit of Hck Hot Chicken?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall prepare, and keep for not less than three years following the end of each of its fiscal years, or such longer period required under Applicable Law, adequate books and records showing daily receipts in, at, and from the Franchised Restaurant, applicable sales tax returns (if any), all pertinent original serially numbered sales slips and cash register records, and such other sales records as may be reasonably required by Franchisor from time to time to verify Gross Sales and purchases reported by Franchisee to Franchisor, in a form suitable for an audit of its records by an authorized auditor or agent of Franchisor.
Such information shall be broken down by categories of goods, foods and beverages sold, where possible.
Franchisor, its agents, or representatives may, at any reasonable time during normal working hours, audit or review Franchisee's books and records in accordance with generally accepted standards established by certified public accountants.
Franchisor may also conduct the audit at a site other than the Location and Franchise shall provide all information to Franchisor, its agents, or representatives, promptly upon demand (but not later than five days following the date of the request).
If any audit or other investigation reveals an
under-reporting or under-recording error, then upon demand Franchisee shall pay the amount determined to be owed, plus interest at the daily equivalent of twelve percent (12%) per year simple interest, not to exceed the highest rate permitted by Applicable Law. In addition, if any such audit or other investigation reveals an under-reporting or under-recording error of two percent (2%) or more or if Franchisee fails to submit any reports when due, then in addition to any other sums due and in addition to any other rights and remedies it may have, including the right to terminate this Agreement as provided in Section 14, the expenses of the audit/inspection shall be borne and paid by Franchisee upon billing by Franchisor, which shall include Franchisor's Travel Expenses and Wages and reasonable accounting and legal expense. Without limiting the foregoing, if such audit or other investigation reveals an under-reporting or under-recording error of five percent (5%) percent or more, Franchisor, in addition to any other rights and remedies it may have, including the right to terminate this Agreement as provided in Section 14, may require Franchisee to maintain and deliver to Franchisor from time to time, financial statements audited by an independent certified public accountant.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
Based on the 2025 Hck Hot Chicken Franchise Disclosure Document, the franchisee is required to maintain adequate books and records suitable for an audit by an authorized auditor or agent of Hck Hot Chicken. The franchisee must provide all information to Hck Hot Chicken, its agents, or representatives promptly upon demand, but not later than five days following the date of the request.
If an audit reveals any under-reporting or under-recording errors, the franchisee must pay the amount owed plus interest. If the under-reporting error is two percent or more, the franchisee will bear the expenses of the audit/inspection, including travel, wages, accounting, and legal expenses. If the under-reporting error is five percent or more, Hck Hot Chicken may require the franchisee to maintain and deliver financial statements audited by an independent certified public accountant.
In summary, the auditor communicates primarily with Hck Hot Chicken, its agents, or representatives during the audit process. However, if discrepancies are found, the franchisee will be required to provide necessary information and potentially bear the costs of the audit and further financial statement audits.