What are the consequences for a Southern Steer franchisee who attempts to divert or conceal gross revenues?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
ees that the Franchisor may: (a) interview the Franchisee's employees and customers; (b) take photographs and videotapes of the interior and exterior of the Franchised Location; (c) examine and remove samples of the Foods, Beverages and Products and other products sold or used at the Franchisee's Southern Steer Business; and (d) evaluate the quality of the Foods, Beverages and Products, other products, and the services provided by the Franchisee to its customers. The Franchisor will have the right to use all interviews, photographs and videotapes of the Franchisee's Southern Steer Business for such purposes as the Franchisor deems appropriate, including use in advertising, marketing and promotional materials, without any approval of or any compensation to the Franchisee.
- 14.5. Payment of Audit Costs. If an audit establishes that the Franchisee's Gross Revenues were understated by more than 2% in any payment period or fiscal year, then the Franchisee will, within 10 days after receipt of an invoice, pay the Franchisor for all costs and expenses incurred for the audit of the Franchisee's Financial Records (including employee Salaries and Benefits, Travel Expenses, and audit fees).
- 14.6. Under-Reporting. If it is found that the Franchisee under-reported Gross Revenues, the Franchisee will reimburse the Franchisor of the amount of the Fees that would have been due had Gross Revenues been reported accurately, plus Interest each month in the amount set out in Section 3.3(c).
- 14.7. Late Reporting. If the Franchisee fails to send the Franchisor any report that is due on a weekly basis, the Franchisor may charge the Franchisee, to the extent permitted by applicable law, its then current late report fee. Currently, the late report fee is $100 for each Week the reports are late. If Franchisee fails to send the Franchisor any report that is due on a monthly basis, annual basis, or quarterly basis, the Franchisor may charge the Franchisee, to the extent permitted by law, its then current late report fee. Currently, the late report fee is $100 for each month the report is late.
- 14.8. Disclosure.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, under-reporting gross revenues can lead to financial repercussions. If an audit reveals that a franchisee has understated their gross revenues by more than 2% in any payment period or fiscal year, the franchisee is responsible for covering all costs and expenses associated with the audit. This includes employee salaries and benefits, travel expenses, and audit fees, payable within 10 days of receiving an invoice from Southern Steer.
In addition to covering audit costs, a Southern Steer franchisee who under-reports gross revenues will be required to reimburse Southern Steer for the amount of fees that would have been due had the gross revenues been accurately reported. This reimbursement will also include interest, calculated monthly as outlined in Section 3.3(c) of the franchise agreement.
Southern Steer also has the right to disclose information relating to the Southern Steer Business, including the Franchisee's name, any address and/or telephone number(s), Gross Revenues, expenses, results of operations and/or other information in its Franchise Disclosure Document as required by law, and in other documents and places as determined by Southern Steer.