When is a Hydrodog franchisee required to pay audit expenses?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
| Name of Fee(1) | Amount(4) | Due Date | Remarks |
|---|---|---|---|
| Audit Expenses | Cost of inspection or audit, plus travel. | On demand | Payable only if you fail to furnish reports, supporting records or other required information or you under report Gross Sales by 2% or greater. |
Source: Item 6 — OTHER FEES (FDD pages 12–16)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, a franchisee is required to pay audit expenses under specific circumstances. These expenses, which include the cost of the inspection or audit itself, as well as travel costs, become payable 'on demand.' This means Hydrodog can request immediate payment.
The trigger for these audit expenses is linked to the franchisee's compliance with reporting requirements and the accuracy of their reported gross sales. Specifically, if a Hydrodog franchisee fails to furnish required reports, supporting records, or other necessary information, they will be responsible for covering the audit expenses.
Additionally, audit expenses are payable if a franchisee underreports their Gross Sales by 2% or greater. This provision serves as a financial disincentive for underreporting income and ensures that Hydrodog receives accurate royalty and marketing fund fees, which are calculated as a percentage of Gross Sales. Franchisees should maintain meticulous records and ensure accurate reporting to avoid incurring these potentially significant audit-related costs.