Under what condition is a Monicals Pizza franchisee required to have their financial statements reviewed or audited by a certified public accountant, and who bears the expense?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall submit to Franchisor copies of all state sales tax returns that are required to be filed with the appropriate governmental agency and such other records as Franchisor may reasonably request from time to time or as specified in the Confidential Operations Manual. Franchisor has the right to release financial and operational information relating to the Franchised Restaurant to Franchisor's lenders or prospective lenders, or to use or disclose such information in an earnings claim created in connection with the sale of Monical's Pizza Franchises.
Franchisee or Franchisee's chief financial officer shall certify as true and correct all reports submitted pursuant to this Agreement.
12.5 Computer/Point-of-Sale System
Franchisee shall purchase, install, update, maintain and use computer and point-of-sale systems consisting of software in accordance with Franchisor's specifications and hardware in accordance with either the Franchisor's or software vendor's specifications. Franchisor shall have full access to all of Franchisee's computer and point-of-sale data and systems and all related store operational information by means of direct access, either in person and by broadband or other Internet to permit Franchisor to verify Franchisee's compliance with its obligations under this Agreement. If Franchisee uses the system for any other purposes, Franchisee shall have the obligation to partition its system to limit access to its non-operational systems.
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
Based on the 2025 Monicals Pizza Franchise Disclosure Document, franchisees are required to submit copies of all state sales tax returns to the Franchisor, which must be filed with the appropriate governmental agency. Additionally, franchisees must provide other records as reasonably requested by Monicals Pizza from time to time or as specified in the Confidential Operations Manual. The franchisee or the franchisee's chief financial officer must certify that all submitted reports are true and correct.
Monicals Pizza retains the right to access the franchisee's computer and point-of-sale data and systems, including all related store operational information, to verify compliance with the franchise agreement. This access can be direct, either in person or via broadband or other Internet connection. If the franchisee uses the system for purposes other than those related to Monicals Pizza operations, they are responsible for partitioning the system to restrict access to non-operational systems.
The FDD does not explicitly state under which specific conditions a Monicals Pizza franchisee is required to have their financial statements reviewed or audited by a certified public accountant, nor does it specify who would bear the expense of such a review or audit. A prospective franchisee should clarify these requirements with the franchisor during their due diligence process to fully understand their financial reporting obligations and potential costs.