When are audit costs due to Punch King Fitness?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
| Name of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Supplier Approval | Reimbursement of costs and expenses Franchisor incurs in approving a supplier | When applicable | If you want us to approve a supplier for the purchase of a designated product or service other than the supplier we designate, we may require that you reimburse us for the costs and expenses we incur in approving the supplier. |
| Step-In Right Expenses5 | Franchisor's personnel and administrative and travel costs, plus fifteen percent (15%) of that Gross Revenues | As incurred | If you are absent, ill, or unable to operate the Franchised Business or fail to pay taxes or required amounts, or the Franchised Business is having a significant negative impact on the Punch King Fitness System, we may step-in, and you must reimburse us our costs and expenses. |
| Audit | All costs of inspection and audit | Upon demand | You must reimburse us for audit expenses if the audit is initiated due to your non compliance with the terms herein or the Operating Manual or if an inspection reveals an understatement of Gross Revenues by 3% or more. |
| System Standard Violation | All costs of inspection and audit | Upon demand | If you fail to adhere to the System Standards, you must reimburse us for any and all costs and expenses associated with counsel, inspection, support, assistance, and enforcement rendered to and against Franchisee regarding said System Standards |
Source: Item 6 — OTHER FEES (FDD pages 10–16)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, franchisees are responsible for reimbursing Punch King Fitness for audit expenses. These costs become due 'upon demand.' This means that Punch King Fitness can request payment for these expenses at any time after they are incurred.
Specifically, the franchisee is liable for audit expenses if the audit is initiated because of non-compliance with the terms outlined in the Franchise Agreement or the Operating Manual. Additionally, if an inspection reveals that the franchisee has understated Gross Revenues by 3% or more, they will be responsible for covering the audit costs.
This 'upon demand' payment term is relatively standard in franchising. It is important for prospective Punch King Fitness franchisees to understand the conditions under which they may be subject to an audit and incur these expenses, and to ensure accurate financial reporting to avoid potential audit triggers.