Under what condition can Auntie Annes demand audited financial statements from a franchisee?

According to Auntie Anne's 2024 Franchise Disclosure Document, Auntie Anne's has the right to demand audited financial statements from a franchisee if a financial-related default has occurred under the Franchise Agreement within the last calendar year. This means that if a franchisee violates any financial terms or obligations outlined in the agreement, Auntie Anne's can require them to provide audited financial statements to verify their compliance and financial standing.

In addition to the right to demand audited financial statements under specific conditions, Auntie Anne's also requires franchisees to maintain accurate and complete financial records for at least three years. These records must include all revenues, books, tax returns, and supporting documentation like bank statements and POS records. Franchisees must also submit statements of costs incurred during the development and initial operation of the franchised business.

These requirements ensure that Auntie Anne's can monitor the financial health and performance of its franchisees, and that franchisees are transparent and accountable in their financial dealings. For a prospective franchisee, this highlights the importance of adhering to the financial terms of the Franchise Agreement to avoid triggering a demand for audited financial statements, which can be costly. It also emphasizes the need to maintain meticulous records and be prepared to provide them to Auntie Anne's upon request.