Effective Date: October 15, 2026 Version: 1.0 Applies to: All Franchisees subject to audit or inspection under a Franchise Agreement with the Company, and to the Company's audit and inspection function.
Article 1: Introduction and Scope
1.1 This Policy governs verification of the franchise system: the operational inspection program, the financial audit of Gross Sales reporting, the Franchisee's cooperation duties, the conduct duties of the Company and its inspectors and auditors, and the consequences of findings. The Franchise Agreement grants the audit and inspection rights; this Policy states the procedure by which those rights are exercised.
1.2 An audit or inspection under this Policy is a verification, conducted on the scope stated at the outset. A financial audit does not extend to a business of the Franchisee that is unrelated to the Franchised Business.
1.3 The Franchise Disclosure Document controls the offer and sale of franchises. No provision of this Policy, and no content in any portal, makes any representation concerning earnings, sales, revenue, or profitability of a Franchised Business.
1.4 Where the franchise law of the state in which the Franchised Business is located gives the Franchisee rights greater than this Policy, that law prevails to the extent of the conflict. If a provision of this Policy conflicts with the Terms of Use, this Policy controls for the subject it governs. If a provision of this Policy conflicts with the Franchise Agreement, the Franchise Agreement controls.
Article 2: Definitions
2.1 Brand Standards Manual: the Company's versioned and dated specification of the brand standards for the franchise system, governed by the Franchise Brand Standards Policy.
2.2 Company: All About Pawz, LLC, a Tennessee limited liability company.
2.3 Franchise Agreement: the franchise agreement between the Company and the Franchisee granting the franchise for the Franchised Business.
2.4 Franchise Disclosure Document: the disclosure document the Company provides to a prospective franchisee under the Federal Trade Commission Franchise Rule and applicable state franchise law.
2.5 Franchised Business: the business the Franchisee is granted the right to operate under the Franchise Agreement at the Franchised Location.
2.6 Franchised Location: the premises from which the Franchised Business is operated, as identified in the Franchise Agreement.
2.7 Franchisee: a person or business that has been granted a franchise by the Company and is a party to a Franchise Agreement.
2.8 Gross Sales: the revenue measure defined in the Franchise Agreement and in the Franchise Fees & Royalties Policy, on which royalties are computed.
2.9 Platform: the websites, applications, and services the Company operates under the name All About Pawz, including aapawz.com.
Article 3: Operational Inspections
3.1 The Company shall inspect each Franchised Location at the frequency the Franchise Agreement states, against the current version of the Brand Standards Manual. Each inspection is scored on the Brand Standards Manual checklist, applied consistently across the franchise system, so that a score has the same meaning at every location.
3.2 Pre-opening inspection. No Franchised Location may open without passing a pre-opening inspection, which verifies the build-out, the equipment, the systems, the staffing, and the completion of training under the Franchise Training Policy. The pre-opening inspection is pass or fail. A deficiency is itemized, shall be corrected, and shall be re-inspected before opening. A location that has not passed does not open.
3.3 Announced and unannounced inspections. The Company may conduct an announced inspection and an unannounced inspection, as the Franchise Agreement authorizes. An inspection takes place during the business hours of the Franchised Location. The Franchisee shall admit an inspector who identifies as an inspector of the Company. Refusal of entry to an inspection is a standalone violation under Article 7.4, regardless of the condition the inspection would have found.
3.4 Inspection report. The Company shall deliver the inspection report to the Franchisee within five (5) business days after the inspection. The report states the score, each deficiency itemized against the section of the Brand Standards Manual it concerns, and the cure deadline for each deficiency.
3.5 A deficiency found on inspection is addressed by cure notice under the Franchise Brand Standards Policy: the inspection finds the deficiency, the cure notice follows, and a re-inspection verifies the cure.
Article 4: Cooperation Duties
4.1 The Franchisee shall provide: (a) full access to the Franchised Location during business hours, for an announced or an unannounced inspection; (b) access to the books and records relevant to the scope of the audit or inspection, including point-of-sale data, bank records for the Franchised Business, supplier invoices, and payroll records; and (c) the availability of staff for interview where the audit or inspection requires it.
4.2 The Franchisee shall not obstruct, delay, or alter records in connection with an audit or inspection. Where a record is held by the Franchisee's accountant or another custodian, the Franchisee shall produce the record within five (5) business days after the request. A record not produced after that period is treated as not existing, and a figure that cannot be verified from the records produced is recorded as unverified, which is itself a finding.
4.3 The Company shall conduct an audit or inspection during business hours and with minimal disruption to operations. An inspector or auditor shall identify on arrival. The scope stated at the outset is the scope pursued.
4.4 The Franchisee shall keep the books and records of the Franchised Business for the retention period the Franchise Agreement states, in a form that permits reconciliation of Gross Sales under Article 5.
Article 5: Financial Audits
5.1 The Company may audit the Franchisee's reporting of Gross Sales, as of right on the frequency the Franchise Agreement states and in any event on thirty (30) days' written notice. The audit reconciles reported Gross Sales against: (a) point-of-sale and payment-processing records, including the Platform transaction data for payments the Platform processes for the Franchised Business; (b) bank deposits for the Franchised Business; and (c) supplier purchase records.
5.2 The audit period covers up to the twenty-four (24) months before the audit. A record older than the retention period in Article 4.4 is not required to exist; a record within the Franchisee's possession shall not be withheld on the ground that the record is older than the audit period.
5.3 Audit costs. The Company bears the cost of a financial audit, except that the Franchisee shall reimburse the reasonable cost of the audit where the audit finds an understatement of Gross Sales exceeding the threshold stated in the Franchise Agreement for the audit period. A Franchisee whose reporting is verified as accurate does not bear the cost of the audit that verified it.
5.4 Underpayment. An understatement found by an audit is payable immediately on demand, with interest from the original due date of the underpaid amount, as stated in the Franchise Fees & Royalties Policy. Where an understatement is deliberate, the additional consequences stated in the Franchise Agreement apply, and the matter is a default matter under Article 7. An understatement shown to be an arithmetic or classification error, corrected and paid with interest on demand, is a correction and not in itself a deliberate understatement.
Article 6: Records of Audits and Inspections
6.1 The Company shall maintain the record of each audit and inspection: the notice given, the scope stated, the records examined, the score or findings, the report delivered, and the cure or payment that followed.
6.2 The Franchisee shall keep a copy of each inspection report and audit finding for the Franchised Location and shall produce that copy on a later inspection or audit where the Company requests it in connection with a repeated finding under Article 7.1.
Article 7: Findings and Consequences
7.1 Inspection deficiencies. A deficiency is addressed by cure notice under the Franchise Brand Standards Policy, with re-inspection. A failure of the same standard across successive inspections is a repeated failure: the cure plan requirement under that policy applies, and the pattern is part of the Franchisee's compliance record.
7.2 Financial understatements. An understatement is addressed as stated in Article 5.4: immediate payment with interest, reimbursement of audit costs where Article 5.3 applies, and, where the understatement is deliberate, the consequences stated in the Franchise Agreement and default proceedings under the Franchise Termination Policy.
7.3 Animal-welfare findings. A finding of neglect, abuse, or reckless endangerment of an animal is addressed by immediate proceedings under the Franchise Brand Standards Policy and the Franchise Termination Policy. No cure notice precedes such proceedings, and no further inspection is required before proceedings begin.
7.4 Obstruction. Refusal of entry, withholding of a record required under Article 4, alteration of a record, or intimidation of staff in connection with an audit or inspection is a standalone violation and grounds for default proceedings under the Franchise Termination Policy, without regard to any other finding the audit or inspection makes or does not make.
7.5 Cure. Except as Articles 7.3 and 7.4 provide, a finding that is capable of cure is cured in accordance with the cure notice that states it, within the period that notice allows, and the Franchisee shall confirm the cure in writing. A cured finding remains part of the compliance record for the purpose of Article 7.1.
Article 8: Liability
8.1 Exclusion of certain damages. To the fullest extent permitted by law, neither party is liable to the other for indirect, incidental, special, punitive, or consequential damages, or for lost profits, lost revenue, or loss of goodwill, arising out of or relating to this Policy, even if the party has been advised of the possibility of those damages.
8.2 Cap. To the fullest extent permitted by law, the Company's total liability arising out of or relating to this Policy shall not exceed the greater of (a) the amounts the Franchisee paid to the Company under this Policy in the twelve months before the event giving rise to the claim, or (b) one hundred dollars ($100).
8.3 Carve-outs. This Article does not limit (a) a party's indemnification obligations under this Policy; (b) liability for fraud or willful misconduct; (c) amounts the Franchisee owes for fees, royalties, understated amounts, interest, or audit costs under the Franchise Agreement and this Policy; or (d) liability that cannot be limited under applicable law.
8.4 Essential purpose. The parties agree that this Article allocates risk between them, that it is an essential part of the basis of their bargain, and that it applies even if a limited remedy fails of its essential purpose.
Article 9: Indemnification
9.1 Duty. The Franchisee shall indemnify, defend, and hold harmless the Company and its members, managers, employees, and agents from and against every claim, demand, action, loss, liability, judgment, settlement, cost, and expense (including reasonable attorneys' fees) arising out of or relating to: (a) the Franchisee's breach of this Policy, including obstruction under Article 7.4 and a deliberate understatement under Article 5.4; (b) the operation of the Franchised Business; (c) the Franchisee's violation of any law or of the rights of any person; and (d) taxes for which the Franchisee is responsible under the Franchise Agreement.
9.2 Procedure. The Company shall give prompt written notice of a claim under this Article. The Franchisee shall control the defense with counsel reasonably acceptable to the Company. The Company may participate in the defense at its own expense. The Franchisee shall not settle a claim in a manner that imposes any obligation or restriction on the Company, or that does not release the Company fully, without the Company's prior written consent.
9.3 Survival. This Article survives the termination of this Policy.
Article 10: Enforcement and Appeals
10.1 Investigation. The Company may investigate any suspected violation of this Policy. The Franchisee shall cooperate with an investigation and shall produce the records this Policy requires the Franchisee to keep.
10.2 Notice. If the Company determines that the Franchisee has violated this Policy, the Company shall give written notice stating the provision violated and the facts relied on, except where notice would compromise an investigation of fraud, a safety risk, or a legal obligation.
10.3 Opportunity to cure. Where a violation is capable of cure, the Franchisee has the cure period stated in the cure notice for the finding, in accordance with Article 7.5, to cure the violation and to confirm the cure in writing. No cure period applies to fraud, a risk to the safety of a person or an animal, obstruction under Article 7.4, unlawful conduct, or a violation that by its nature cannot be cured.
10.4 Measures. If a violation is established and is not cured within the period allowed, the Company may, proportionate to the violation: (a) issue a written warning; (b) require a cure plan under the Franchise Brand Standards Policy; (c) require remedial training under the Franchise Training Policy; (d) demand payment of an understated amount, interest, and audit costs as Articles 5.3 and 5.4 provide; (e) proceed under the Franchise Termination Policy where the violation is a default under the Franchise Agreement; and (f) exercise any other right or remedy available under the Franchise Agreement or at law.
10.5 Appeal. The Franchisee may appeal a measure or a finding under this Article by written notice to legal@aapawz.com within thirty (30) days of the measure or finding, stating the grounds and attaching the records relied on. The appeal is decided by a person who did not make the original decision. The Company's decision on appeal is final. A measure remains in effect during an appeal, and an amount found due under Article 5 remains payable during an appeal, unless the Company directs otherwise in writing.
10.6 No waiver by delay. The Company's delay in acting on a violation is not a waiver of the violation or of any later violation of the same kind.
Article 11: Term and Termination
11.1 This Policy takes effect when the Franchisee enters into the Franchise Agreement and continues for the term of the Franchise Agreement, unless the Franchise Agreement ends earlier under the Franchise Termination Policy.
11.2 Termination of the franchise relationship, the grounds for termination, the cure periods by ground, and the post-termination duties of the Franchisee are governed exclusively by the Franchise Agreement and the Franchise Termination Policy, which are incorporated into this Policy by reference for that subject. This Policy creates no separate right to terminate the Franchise Agreement.
11.3 An audit of a period before termination may be conducted after termination for that period, and an amount found due for that period is payable as Article 5.4 provides.
11.4 The Definitions, Liability, Indemnification, Enforcement and Appeals (for measures taken before termination), Dispute Resolution, and General Provisions Articles of this Policy survive termination.
Article 12: Dispute Resolution
12.1 Any dispute arising out of or relating to this Policy, or to the relationship it governs, is governed by the Dispute Resolution Policy, which is incorporated into this Policy by reference. The franchise dispute procedure stated in the Franchise Dispute Resolution Policy applies before and in addition to that incorporation, as that policy provides.
Article 13: General Provisions
13.1 Amendments. The Company may amend this Policy by posting the amended Policy in the Document Center and giving notice to the Franchisee at the email address in the Franchisee's account. An amendment that materially increases the Franchisee's obligations takes effect thirty (30) days after notice; other amendments take effect on posting. Continued operation of the Franchised Business after the effective date of an amendment is acceptance of it. If the Franchisee does not accept an amendment, the Franchisee's remedy is to terminate under the Franchise Termination Policy as that policy and the Franchise Agreement provide, before the amendment takes effect.
13.2 Notices. Legal notices under this Policy shall be sent to legal@aapawz.com. Operational notices and all other communications shall be sent to support@aapawz.com. A notice to the Company is effective when the Company acknowledges receipt or, for email, one business day after sending, whichever is earlier. Notices to the Franchisee are effective when sent to the email address in the Franchisee's account or posted to the account's notice facility in the portal, whichever occurs first. The Franchisee shall keep the email address in the account current.
13.3 Governing law. This Policy is governed by the laws of the State of Tennessee, without regard to its conflict-of-laws rules. Subject to the Dispute Resolution Policy, any proceeding arising out of this Policy shall be brought in the state or federal courts located in Shelby County, Tennessee, and the parties consent to personal jurisdiction there. Where the franchise law of the state in which the Franchised Business is located gives the Franchisee rights greater than this Policy, that law prevails to the extent of the conflict.
13.4 Severability. If any provision of this Policy is held unenforceable, the provision shall be enforced to the fullest extent permitted, and the remaining provisions continue in full effect.
13.5 Entire agreement. This Policy, together with the documents it incorporates by reference, is the entire agreement between the Company and the Franchisee for the subject it governs and supersedes every prior or contemporaneous statement, communication, or agreement on that subject, whether written or oral. No statement concerning earnings, sales, revenue, or profitability forms part of the agreement between the Company and the Franchisee unless the statement is contained in the Franchise Disclosure Document as the Franchise Rule permits.
13.6 Assignment. The Franchisee shall not assign this Policy or any right or obligation under it without the Company's prior written consent, and an assignment without consent is void. A transfer of the franchise is governed by the Franchise Transfer Policy. The Company may assign this Policy to an affiliate or in connection with a sale of all or part of its business, on notice to the Franchisee.
13.7 Waiver. A waiver of any provision of this Policy is effective only in writing and only for the instance stated. No waiver is a waiver of any other provision or instance.
13.8 Interpretation. Headings are for convenience only. "Including" means "including without limitation." This Policy shall not be construed against a party on the ground that the party prepared it. The English-language text controls over any translation.
Related articles