Limit Owner’s Audits of Your Kiosk

Shopping center or mall owners that grant licenses to kiosks and carts to conduct business there will want to audit the books and records of a set percentage of those kiosks and carts each year to verify their gross sales. It’s not uncommon for kiosks and carts to submit gross sales statements that underreport their gross sales. Assuming your kiosk or cart license agreement gives the owner the right to audit, it would probably take advantage of this to help deter you from underreporting your gross sales—and underpaying percentage rent.

Why Frequent Audits Are Problematic

Especially if your kiosk or cart generates many sales, a lot of percentage rent may be at stake. The owner probably thinks that the onerous experience of an audit may be enough to motivate you to report your future gross sales more accurately. An audit is also a way for the owner to keep tabs on how your kiosk’s or cart’s business is doing.

It’s typical for an owner to audit 25 percent of its kiosks and carts annually. However, an owner that frequently makes you go through the time-consuming and expensive audit process every year or even more than once a year will create issues for you. For example, if the owner insists on auditing you during peak sales times of the year, you’ll be focused on that instead of your business. And audits take up time no matter when they happen. Plus, being asked for many audits diminishes good will between you and the owner—it feels as though it constantly assumes you’re cheating it.

Negotiate Convenient Audit Times

The times that an owner chooses to conduct audits can make the difference in the process being a detriment to you. Here are examples of audit times you can insist on that will make things easier for you:

  • If you’ll be operating at the center during the end-of-year holiday season (typically from October to January), give the owner the right to audit in January. It avoids peak sales times.
  • If you’ll be operating at the center during other seasons or throughout the year, ask for audits to be conducted later in the year, and specify times when it would be the least burdensome.