Does the auditor express an opinion on the effectiveness of Annex Brands' internal control?

According to Annex Brands' 2025 Franchise Disclosure Document, the independent auditor does not express an opinion on the effectiveness of the company's internal control. While the auditor obtains an understanding of internal control relevant to the audit to design appropriate audit procedures, this is explicitly not for the purpose of expressing an opinion on the effectiveness of Annex Brands' internal control.

This means that the audit focuses on the financial statements themselves, ensuring they are fairly presented and free from material misstatement. The audit procedures are designed to assess the risks of misstatement and to examine evidence supporting the amounts and disclosures in the financial statements. However, the auditor's report does not provide any assurance about the quality or effectiveness of Annex Brands' internal controls over financial reporting.

For a potential franchisee, this highlights the importance of conducting thorough due diligence to understand how Annex Brands manages its financial processes and internal controls. While the financial statements are audited, the absence of an opinion on internal control means that a franchisee should independently assess the company's financial management practices and risk management procedures.

This is a fairly standard practice in franchise FDDs. Franchisees should consider asking Annex Brands about their internal control policies and procedures, and possibly seek advice from a financial advisor to evaluate the financial risks associated with investing in the franchise.