Are the financial statements provided by Azal Coffee audited or unaudited?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
ARTICLE 10 - REPORTS, ACCESS AND AUDIT, CUSTOMER LISTS
10.1 Reports and Financial Statements.
You must use the standard reporting systems and forms specified by us. You must submit to us a complete statement of Gross Sales and other information specified by us for the reporting periods and on the forms specified by us. You must provide us with copies of all sales or similar tax returns, annual income tax returns, monthly profit and loss statements, monthly balance sheets, monthly inventory statements and annual financial statements. You must provide copies of monthly statements or reports to us within fifteen (15) days of the end of each month and copies of annual statements or reports within thirty (30) days of the end of your fiscal year. You must use the "chart of accounts" designated by us from time to time when recording financial information and preparing financial statements and other reports. We may specify other requirements relating to reporting in the Brand Standards Manual.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 50–51)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, Azal Coffee requires franchisees to submit various financial reports, including monthly profit and loss statements, balance sheets, inventory statements, and annual financial statements. These reports must adhere to Azal Coffee's standard reporting systems and utilize their designated "chart of accounts." Franchisees must provide monthly reports within 15 days of each month's end and annual reports within 30 days of their fiscal year's end.
While Azal Coffee mandates the submission of financial statements and specifies the format and timing for these submissions, the FDD does not explicitly state whether these financial statements must be audited. The agreement does state that franchisees must keep complete and correct books of account, business records, and records of Gross Sales, in accordance with generally accepted accounting principles.
Prospective franchisees should directly ask Azal Coffee whether the annual financial statements they are required to submit must be audited by a certified public accountant. Understanding whether an audit is required is crucial for assessing the ongoing compliance costs and administrative burden associated with operating an Azal Coffee franchise.