Under what condition will a Spray Net franchisee be charged an audit fee?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
e.
| Name of Fee | Amount1 | Due Date | Remarks |
|---|---|---|---|
| Roofing Equipment | $20,000 to $30,000 The fees below will only be charged if you fail to comply with the terms of your Franchise Agreement. | Upon choosing to offer Roofing Services within the Territory(ies) | If you choose to offer roofing services, you must purchase approximately $20,000 to $30,000 of applicable equipment from us or our Approved Supplier(s). |
| Audit Fee6 | Actual cost incurred by us. | Immediately after understatement of Gross Sales is determined by our inspection. |
Source: Item 6 — > **ITEM 6 OTHER FEES (FDD pages 15–29)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, a franchisee will be charged an audit fee if an inspection determines that they have underreported their gross sales. In this case, the franchisee is responsible for paying the royalty due, plus interest, and all costs related to performing the audit. The FDD specifies that there is no charge for the audit if sales are reported accurately.
The audit fee is the actual cost incurred by Spray Net to conduct the audit. Item 6 indicates that previous audit costs alone have ranged between $1,000 and $3,000, but could be more. The specific amount will depend on factors such as the location of the franchise, the condition of the franchisee's financial records, and the scope and timing of the audit.
This policy underscores the importance of accurate and transparent financial reporting for Spray Net franchisees. Franchisees should maintain meticulous records and ensure timely and accurate reporting of gross sales to avoid triggering an audit and incurring these potentially significant costs. It is also important to note that underreporting sales can lead to additional penalties beyond the audit fee, including the payment of past due royalties and interest on those amounts.