Under what conditions will a Learningrx franchisee be required to pay for the cost of an audit?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee must provide Franchisor or its agents access to Franchisee's Business and computer systems to examine or audit Franchisee's Business, at any reasonable time without notice. Franchisor will bear the cost of the audit, unless Franchisee fails to report as required or understates Gross Revenue by two percent (2%) or more for any reported time period, in which case Franchisee will pay the audit cost plus interest on understated costs of one percent (1%) per month. Franchisee must immediately pay to Franchisor all sums owed in addition to any other remedies provided in this Agreement or by law.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to the 2025 Learningrx Franchise Disclosure Document, Learningrx typically bears the cost of audits conducted on a franchisee's business. However, a Learningrx franchisee becomes responsible for covering the audit expenses, along with interest, if certain discrepancies are discovered during the audit.
Specifically, the franchisee is liable for the audit costs if they fail to report financial information as required by Learningrx. Additionally, if an audit reveals that the franchisee has understated their Gross Revenue by two percent (2%) or more for any reported time period, they will be required to pay the audit cost. In addition to covering the audit cost, the franchisee must also pay interest on the understated costs at a rate of one percent (1%) per month.
This provision in the franchise agreement incentivizes accurate and timely financial reporting from Learningrx franchisees. It also ensures that Learningrx can recover audit costs when discrepancies are due to the franchisee's failure to adhere to reporting standards or underreporting of revenue. The franchisee is obligated to immediately remit all owed amounts to Learningrx, in addition to any other remedies available to Learningrx under the agreement or by law.