On what basis of accounting are Alloy's financial statements prepared?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
ranchise agreement, franchisees will operate a business which offers customers personal training in a group setting delivered by certified instructors under the name "Alloy Personal Training." Customers are provided with individualized training programs that are conducted in small groups.
The Company is a limited liability company, and therefore, the member is not liable for the debts, obligations or other liabilities of the Company, whether arising in contract, tort or otherwise, unless the member has signed a specific guarantee.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance wit
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the company prepares its financial statements using the accrual basis of accounting, following accounting principles generally accepted in the United States of America (U.S. GAAP). This means that revenues and expenses are recognized when they are earned or incurred, regardless of when cash changes hands.
For a prospective Alloy franchisee, this is important because it ensures that the financial information presented in the FDD is standardized and comparable to other franchises that also follow U.S. GAAP. Understanding that Alloy uses accrual accounting helps potential franchisees better assess the company's financial health and performance.
Additionally, the FDD notes that the preparation of these financial statements requires management to make estimates and assumptions that could affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results may differ from these estimates, which is a standard disclosure in financial statements. This highlights the importance of reviewing the financial statements with a qualified professional who can assess the reasonableness of these estimates and their potential impact on the franchisee's investment decision.