Are the sales reports submitted by Annex Brands franchisees audited?

According to Annex Brands' 2025 Franchise Disclosure Document, the sales reports submitted by franchisees are not audited. The financial performance representations provided in Item 19 are based on these unaudited reports. While Annex Brands states they have no reason to believe the sales figures are overstated, they do not independently verify the accuracy of the information. This means the gross sales figures presented may not have undergone external validation for accuracy.

For a prospective Annex Brands franchisee, this implies a degree of risk. The financial performance data, such as the average annual gross sales of $378,000 for all franchised centers in operation for more than 12 months as of September 30, 2024, is based on self-reported data. While Annex Brands offers to provide written substantiation of this information upon reasonable request, the lack of an audit means franchisees should conduct their own due diligence and not solely rely on the franchisor's representations.

It is common practice in the franchise industry for franchisors to present financial performance representations. However, the level of assurance regarding the accuracy of this data can vary. Some franchisors may use audited financial statements, while others rely on unaudited reports. The FDD explicitly states that Annex Brands' reports are unaudited, which is a point for potential franchisees to consider when evaluating the opportunity. Consulting with financial advisors and conducting independent market research is crucial to assess the potential profitability of an Annex Brands franchise.