5.52.060 Franchise fee and financial requirements.
A. Franchise Fee.
1. Following the issuance and acceptance of the franchise, the grantee shall pay to the grantor a franchise fee on gross annual revenues in the amount and at the times set forth in the franchise agreement.
2. The grantor, on an annual basis, shall be furnished a statement within ninety days of the close of the calendar year, either audited and certified by an independent certified public accountant or certified by an officer of the grantee, reflecting the total amounts of gross revenues and all payments, deductions and computations for the period covered by the payment. Upon thirty days prior written notice, grantor shall have the right to conduct an independent financial audit of grantee’s gross annual revenue and franchise fee records, in accordance with generally accepted accounting procedures (GAAP), and if such audit indicates a franchise fee underpayment of three percent or more, the grantee shall assume all reasonable documented costs of such audit.
3. Except as otherwise provided by law, no acceptance of any payment by the grantor shall be construed as a release or as an accord and satisfaction of any claim the grantor may have for further or additional sums payable as a franchise fee under this chapter or for the performance of any other obligation of the grantee.
4. In the event that any franchise fee payment or payment of any adjustment to any franchise fee is not made on or before the dates specified in the franchise agreement, grantee shall pay:
a. An interest charge, computed from such due date, at an annual rate equal to the highest of the most recently published prime lending rates of any of the five largest member banks of the New York Clearing House Association, plus one percent during the period for which payment was due; and
b. If the payment is late by six months or more, a sum of money equal to five percent of the amount due in order to defray those additional expenses and costs incurred by the grantor due to grantee’s delinquent payment.
5. Franchise fee payments shall be made in accordance with the schedule indicated in the franchise agreement.
B. Security Fund.
1. Grantor may require grantee to provide a security fund, in an amount and form established in the franchise agreement. The amount of the security fund shall be established based on the extent of the grantee’s obligations under the terms of the franchise.
2. The security fund shall be available to grantor to satisfy all claims, liens and/or taxes due grantor from grantee which arise by reason of construction, operation, or maintenance of the system, and to satisfy any actual or liquidated damages arising out of a material breach of the franchise agreement, subject to the procedures and amounts designated in the franchise agreement.
3. If the security fund is drawn upon by grantor in accordance with the procedures established in this chapter and the franchise agreement, grantee shall cause the security fund to be replenished to the original amount no later than thirty days after receiving written confirmation from the bank where such security fund is deposited that grantor has made a draw against the security fund. Failure to replenish the security fund shall be deemed a material breach of the franchise. (Ord. 98-09 § 1, 1998)