Is the Mr. Sandless Advertising Fund required to be independently audited?

According to Mr. Sandless's 2025 Franchise Disclosure Document, the Advertising Fund is not required to be independently audited. However, Mr. Sandless will prepare an annual statement of contributions and expenditures for the Advertising Fund. This statement will be available to franchisees within 60 days of the end of the fiscal year, upon written request.

This means that while a third-party audit isn't mandated, Mr. Sandless franchisees have the right to request and review a detailed breakdown of how the advertising funds are collected and spent. This provides a degree of transparency, allowing franchisees to see where their contributions are going.

The lack of a mandatory independent audit might be a concern for some prospective franchisees, as it relies on the franchisor's internal accounting practices. In the absence of an independent audit, franchisees may want to carefully review the annual statement and consider asking for clarification on any items that seem unclear or questionable. It is fairly common in the franchise industry for advertising funds to be audited, so the lack of this requirement is something to consider.

For a prospective Mr. Sandless franchisee, understanding the specifics of how the Advertising Fund is managed and reported is crucial. While the FDD states that an independent audit is not required, the availability of an annual statement offers some insight into the fund's operations. Franchisees should utilize their right to request and scrutinize these statements to ensure the fund is being managed responsibly and in the best interest of the franchise system.