Is a Hck Hot Chicken franchisee required to submit financial statements to the franchisor?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
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- 10.1.1 Franchisee will electronically link the Franchised Restaurant to Franchisor and itsthird-party supplier and will allow Franchisor to poll on a daily or more frequent basis.
- 10.1.2 For restaurants not on the "HCK Hot Chicken" Information System, at Franchisor's request, on or before Wednesday of each Week during the Term hereof, Franchisee shall submit a Gross Sales report signed by Franchisee, on a form prescribed by Franchisor, reporting all Gross Sales for the preceding Week, together with such additional financial information as Franchisor may from time-to-time request. If the Franchisee fails to submit any required report when due, Franchisee must pay a fee of $100 per occurrence and $100 per Week until the Franchisee submits the required report, which shall be deposited into the Brand Fund or such other fund as Franchisor may designate.
- 10.1.3 Within 90 days following the end of each calendar year, Franchisee shall submit to Franchisor an unaudited financial statement prepared in accordance with generally accepted accounting principles, and in such form and manner prescribed by Franchisor, which shall be certified by Franchisee to be accurate and complete. Promptly upon Franchisor's request, Franchisee will furnish Franchisor with a copy of each of Franchisee's reports and returns of sales, use, and gross receipt taxes related to the operation of the Franchised Restaurant. Franchisor reserves the right to require such further information concerning the Franchised Restaurants that Franchisor may from time-to-time reasonably request.
- 10.2 Inspections. Franchisor's authorized representatives shall have the right, from time to time, to enter upon the entire premises of the Franchised Restaurant during business hours, to examine same, conferring with Franchisee's employees, inspecting and checking operations, food, beverages, furnishings, interior and exterior decor, supplies, fixtures, and equipment, and determining whether the business is being conducted in accordance with this Agreement, the System and the HCK Hot Chicken Brand Standards Manual. Franchisor shall use reasonable efforts to avoid materially disrupting the operation of the Franchised Restaurant. Franchisee shall pay Franchisor its then-current fee for any such inspection, which shall be due to Franchisor directly upon invoicing. This fee is not refundable under any circumstances. If any such inspection indicates any deficiency or unsatisfactory condition with respect to any matter required under this Agreement or the HCK Hot Chicken Brand Standards Manual, including quality, cleanliness, service, health and authorized product line, Franchisor will notify Franchisee in writing of Franchisee's noncompliance with the HCK Hot Chicken Brand Standards Manual, the System, or this Agreement and Franchisee shall promptly correct or repair such deficiency or unsatisfactory condition. In addition, Franchisee will be required to undergo an additional audit or re- inspection at Franchisee's sole expense. In the event of an additional audit or reinspection based on a deficiency or unsatisfactory condition, Franchisee shall pay Franchisor an $850 fee for the first offense, or a $2,500 for any additional offense, in addition to reimbursing Franchisor'
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, franchisees are required to submit financial information to the franchisor. Specifically, for restaurants not on the HCK Hot Chicken Information System, the franchisee must submit a gross sales report each week, signed by the franchisee, on a form prescribed by Hck Hot Chicken. This report must detail all gross sales for the preceding week, along with any additional financial information Hck Hot Chicken may request. If a franchisee fails to submit any required report when due, they must pay a fee of $100 per occurrence and $100 per week until the report is submitted, with these fees going to the Brand Fund or another fund designated by Hck Hot Chicken.
Additionally, within 90 days following the end of each calendar year, franchisees must submit an unaudited financial statement to Hck Hot Chicken. This statement must be prepared in accordance with generally accepted accounting principles, in a form and manner prescribed by Hck Hot Chicken, and certified by the franchisee as accurate and complete. Hck Hot Chicken also reserves the right to request further information concerning the franchised restaurants as they may reasonably require from time to time.
Furthermore, Hck Hot Chicken, its agents, or representatives may audit or review the franchisee's books and records at any reasonable time during normal working hours. If an audit reveals an under-reporting or under-recording error of two percent or more, or if the franchisee fails to submit reports when due, the franchisee will bear the expenses of the audit/inspection, including travel, wages, and accounting/legal expenses. If the under-reporting error is five percent or more, Hck Hot Chicken may require the franchisee to provide financial statements audited by an independent certified public accountant.