When preparing the consolidated financial statements, what evaluation is management required to perform regarding the company's ability to continue as a going concern for Atwell Suites?

According to Atwell Suites's 2025 Franchise Disclosure Document, when preparing the consolidated financial statements, management must evaluate whether any conditions or events, when considered together, create significant doubt about the company's ability to continue operating as a going concern for one year after the consolidated financial statements are issued. This evaluation is a standard accounting practice to ensure the financial statements provide a realistic view of the company's financial health.

This evaluation is crucial for prospective Atwell Suites franchisees because it provides insight into the financial stability of the franchisor. If there are significant doubts about the company's ability to continue as a going concern, it could impact the support and services that Atwell Suites can provide to its franchisees. This could affect various aspects of the franchise, including marketing, training, and supply chain management.

Furthermore, the FDD also states that the company's auditors are responsible for forming an opinion on whether the financial statements present fairly the company's financial position, results of operations, and cash flows in accordance with accounting principles generally accepted in the United States of America. The auditors must also conclude whether there are conditions or events that raise substantial doubt about the company's ability to continue as a going concern. This independent audit provides an additional layer of assurance regarding the financial health of Atwell Suites.