Who must certify the annual financial statements submitted by an Apricot Lane franchisee?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE will supply to FRANCHISOR quarterly profit and loss statements and balance sheets on the Franchised Business within thirty (30) days following the end of the calendar quarter. Additionally, FRANCHISEE shall, at its expense, submit to FRANCHISOR by April 30 of each year during the term of this Agreement, a profit and loss statement for such fiscal year and a balance sheet as of the last day of such fiscal year. Such financial statements will be certified to be true and correct by FRANCHISEE. FRANCHISOR reserves the right to require, at FRANCHISEE's expense, annual financial statements, prepared in accordance with generally accepted accounting standards, reviewed or audited by an independent certified public accountant.
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, franchisees are required to submit quarterly profit and loss statements and balance sheets to the franchisor within 30 days of each calendar quarter's end. Additionally, by April 30th of each year, franchisees must submit a profit and loss statement for the fiscal year and a balance sheet as of the last day of that fiscal year.
The FDD specifies that these annual financial statements must be certified as true and correct by the franchisee themselves. However, Apricot Lane retains the right to require franchisees to submit annual financial statements that are prepared according to generally accepted accounting standards (GAAP) and either reviewed or audited by an independent certified public accountant (CPA).
This means that while franchisees initially certify their own financial statements, Apricot Lane has the discretion to demand a more rigorous review or audit by a qualified CPA at the franchisee's expense. This is a fairly standard practice in franchising, allowing the franchisor to ensure accuracy and compliance with accounting standards, especially as the franchise grows or if discrepancies are suspected.