What happens if a Healthsource Chiropractic audit reveals an understatement of gross revenues greater than 2%?

According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, under-reporting gross revenues can lead to serious repercussions. Specifically, if an audit or inspection reveals that a franchisee has under-reported gross revenues by more than five percent (5%), it constitutes grounds for termination of the franchise agreement.

This provision underscores the importance of accurate financial reporting by Healthsource Chiropractic franchisees. Franchise fees and other payments to Healthsource Chiropractic are typically calculated as a percentage of gross revenues, so under-reporting can directly impact the franchisor's income. The FDD emphasizes that consistent and accurate reporting is essential for maintaining a healthy franchisor-franchisee relationship and ensuring the financial stability of the Healthsource Chiropractic system.

While the document specifies consequences for under-reporting by more than 5%, it does not detail the specific actions Healthsource Chiropractic might take if the understatement is greater than 2% but less than or equal to 5%. It is important to note that even if the under-reporting does not reach the 5% threshold for automatic termination, Healthsource Chiropractic may still take action to address the discrepancy, such as requiring the franchisee to pay the underpaid royalties or fees, or issuing a warning. A prospective franchisee should clarify with Healthsource Chiropractic what actions they may take if gross revenues are under-reported by an amount less than or equal to 5%.