What is the monetary penalty for a Mr. Sandless franchisee who underreports sales or conceals income?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
We have established a System-wide advertising fund (the "Advertising Fund") for the common benefit of System franchisees. You are required to participate in and contribute monthly to the Advertising
Fund an amount equal to one percent (1%) of your Gross Sales. You must pay the Advertising Fee in the same manner and at the same time as the Royalty Fees due under this Agreement. Any Businesses owned by us or our affiliates will contribute to the Advertising Fund on the same basis as our franchisees. The Advertising Fund will be administered as follows:
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
The 2025 Mr. Sandless Franchise Disclosure Document does not explicitly state the monetary penalty for underreporting sales or concealing income. However, it does state that franchisees must contribute 1% of gross sales to the Advertising Fund. Underreporting sales would directly affect the amount contributed to this fund.
While a specific penalty for underreporting isn't mentioned, the agreement emphasizes adherence to the Mr. Sandless system and brand standards. Failure to accurately report sales could be construed as a breach of contract, potentially leading to penalties or termination as outlined in other sections of the agreement.
Prospective franchisees should seek clarification from Mr. Sandless regarding the specific consequences of underreporting sales or concealing income. Understanding these potential penalties is crucial for maintaining compliance and avoiding disputes with the franchisor.