Royalty Audit - Verification of Reported Franchisee Revenues
01 April, 2019
Ephraim Stulberg
Contact Author
Background
We were retained by the franchisor of a chain of fast food restaurants to perform royalty audits for a select number of franchisees. We were asked to verify that the revenues reported by the franchisees (and on which royalties paid to the franchisor were based) were complete and accurate.
How MDD Helped
As part of our mandate, we performed mystery shopping, whereby staff would visit the franchisee locations, and order food. We would then request copies of the cash register receipts to confirm that those orders had been recorded in the cash register as a sale. We also observed the number of customers who purchased food during certain times of the day, and reconciled these to the number of sales recorded in the cash register.
Results
We were able to identify thousands of dollars in sales that had not been recorded by the franchisees, which would have resulted in an underpayment of royalties.
The statements or comments contained within this article are based on the author’s own knowledge and experience and do not necessarily represent those of the firm, other partners, our clients, or other business partners.
CONTACT
CONTACT MDD
Our firm has over 80 years of experience working on assignments that span over 800 industries around the world.
PROJECTS
OTHER CASE STUDIES
01 April, 2019
