How many days does a Jersey Mikes franchisee have to demonstrate that understatements of royalty fees resulted from inadvertent error?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
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Submits to Franchisor on two (2) or more separate occasions at any time during the term of the franchise any reports or other data, information or supporting records which understate by more tha n three percent (3%) the Cont inuing Royalty Fe es for any weekly period and F ranchisee is unable to demonstrate to Franchisor's satisfaction within seven (7) days that such understatements resulted from inadvertent error;
Source: Item 22 — CONTRACTS (FDD page 77)
What This Means (2025 FDD)
According to Jersey Mike's 2025 Franchise Disclosure Document, a franchisee has seven days to demonstrate to Jersey Mike's satisfaction that understatements of royalty fees resulted from inadvertent error. This applies if the reports or data submitted understate the Continuing Royalty Fees by more than three percent for any weekly period.
This provision protects Jersey Mike's from franchisees intentionally underreporting their gross receipts to pay less in royalty fees. However, it also acknowledges that unintentional errors can occur. The franchisee bears the burden of proving the error was inadvertent within the seven-day window.
For a prospective franchisee, this means maintaining accurate records and having systems in place to quickly identify and correct any reporting errors. Failure to do so could result in penalties or other consequences as outlined in the franchise agreement. Franchisees should familiarize themselves with the reporting requirements and ensure they have adequate training and support to comply.