Under what conditions will a Spray Net franchisee be responsible for audit costs?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Audit Costs. Following an audit, if we find you have underreported Gross Sales, you will pay the Royalty Fee and all other past amounts due under the Franchise Agreement due to your underreporting, as well as interest and all our costs associated with conducting the audit. Audit costs vary depending upon where you are located, the condition of your financial records, what we audit and when. Previous audit costs alone range between $1,000 and $3,000 and could be more. There are no audit costs to you if your records, r
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 responsible for audit costs if an audit reveals they have underreported Gross Sales. In this case, the franchisee must pay the Royalty Fee and all other past due amounts under the Franchise Agreement resulting from the underreporting. They will also be responsible for interest and all costs Spray Net incurs while conducting the audit.
The FDD states that audit costs can vary, with previous audit costs ranging from $1,000 to $3,000, but could potentially be more. The specific amount depends on factors such as the franchisee's location, the condition of their financial records, and the scope and timing of the audit.
However, the FDD also notes that a Spray Net franchisee will not incur any audit costs if their records, reports, and payments are in order and current. This provides a clear incentive for franchisees to maintain accurate and up-to-date financial records and to ensure timely and correct payments to Spray Net.