Under what condition does Jersey Mikes charge an audit fee, and what does that fee entail?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Audit7 | Cost of audit plus interest on underpayment | 30 days after billing | Payable only if audit of Company shows that you understated Gross Receipts by at least 2%. |
Source: Item 6 — OTHER FEES (FDD pages 15–24)
What This Means (2025 FDD)
According to Jersey Mikes's 2025 Franchise Disclosure Document, an audit fee is charged if an audit conducted by the company reveals that a franchisee has understated their Gross Receipts by at least 2%. This audit can be triggered if Jersey Mike's finds a discrepancy in the payments made by the franchisee.
If the audit reveals an underpayment of Gross Receipts of 2% or more, the franchisee is responsible for covering the cost of the audit itself, in addition to paying interest on the underpaid amount. The interest charged will be at the maximum rate permitted by law. The franchisee must also reimburse Jersey Mike's for all expenses connected with the inspection, including reasonable accounting and legal fees.
This policy incentivizes franchisees to accurately report their Gross Receipts. Franchisees should maintain meticulous records and ensure accurate reporting to avoid triggering an audit and the associated fees and penalties. The audit fee covers the cost of the audit itself, interest on the underpayment, and reimbursement for all expenses connected with the inspection, including reasonable accounting and legal fees.