What is the purpose of including financial statements in the Azal Coffee FDD?
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. Your failure to timely provide required reports or financial statements may result in liquidated damages amounts being assessed against you under Section 15.7.
You agree that we may receive information directly from suppliers and you authorize your suppliers to provide information directly to us. You agree to sign separate authorizations or additional documents requested by suppliers or that we deem necessary for us to obtain information directly from suppliers.
We may disclose your financial records in future Franchise Disclosure Documents and reporting analyses presented to third parties and to our actual and potential lenders. Also, we may share information in your reports and financial statements with other franchisees or prospective franchisees in the ordinary course of our business as a tool to improve the Azal Coffee franchise
system's volume of business and as required to support any financial performance representation we make in our Franchise Disclosure Document.
10.2 Records.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 50–51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, franchisees are required to submit financial statements to Azal Coffee. These include monthly profit and loss statements, balance sheets, inventory statements, and annual financial statements. Franchisees must provide monthly statements within 15 days of each month's end and annual reports within 30 days of their fiscal year's end. These statements must adhere to Azal Coffee's designated "chart of accounts."
Azal Coffee may disclose a franchisee's financial records in future Franchise Disclosure Documents, reporting analyses presented to third parties, and to their actual and potential lenders. Azal Coffee may also share information in these reports with other current or prospective franchisees. This sharing is intended to improve the Azal Coffee franchise system's overall business volume.
Furthermore, Azal Coffee uses these financial statements to support any financial performance representations they make in their Franchise Disclosure Document. This means that the financial data provided by franchisees helps Azal Coffee demonstrate the potential financial performance of an Azal Coffee franchise to prospective franchisees.