What recourse does Monicals Pizza have if an inspection reveals that payments have been underpaid?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor or its designee has the right to require Franchisee to provide the books, records and tax returns of Franchisee via electronic or other means selected by Franchisor for purposes of inspection, examination, copy and audit. If the audit or any other inspection discloses that any payments to Franchisor have been underpaid, then Franchisee shall immediately pay to Franchisor the amount of the underpayment plus interest from the date such amount was due until paid at the rate of eighteen percent (18%) per annum, or the highest rate allowed by the law of the state where Franchisee is located, whichever is lower. If the inspection should reveal that Franchisee has not spent at least two percent (2%) of its monthly Gross Sales on Local Advertising or if the inspection discloses an underpayment of three percent (3%) or more of the amount due for any period covered by the audit, Franchisee shall, in addition, reimburse Franchisor for any and all costs and expenses connected with the inspection, including, without limitation, travel expenses and reasonable accounting and attorneys' fees. The foregoing remedies shall be in addition to any other remedies Franchisor may have.
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, if an inspection reveals underpayment of fees, Monicals Pizza has several avenues for recourse. The franchisee is required to immediately pay the amount of the underpayment to Monicals Pizza. Additionally, interest will be applied to the underpaid amount from the date the payment was originally due until it is paid in full. The interest rate is set at eighteen percent (18%) per annum, or the highest rate allowed by the law of the state where the franchisee is located, whichever is lower.
Furthermore, if the inspection reveals that the franchisee has not spent at least two percent (2%) of its monthly Gross Sales on Local Advertising, or if the underpayment is three percent (3%) or more of the amount due for any period covered by the audit, the franchisee must reimburse Monicals Pizza for all costs and expenses associated with the inspection. These costs include, but are not limited to, travel expenses, reasonable accounting fees, and attorneys' fees.
It is important to note that these remedies available to Monicals Pizza are in addition to any other remedies they may have under the franchise agreement or applicable law. This means Monicals Pizza could pursue additional legal or contractual options to recover the underpaid amounts and any associated damages or losses. Prospective franchisees should be aware of these potential financial consequences and ensure accurate and timely payments to avoid these penalties and potential legal actions.