How are misstatements, including omissions, considered material in B Bops' financial statements?

According to B Bops' 2025 Franchise Disclosure Document, misstatements, including omissions, are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. This definition is used by the independent auditor when assessing the fairness and accuracy of B Bops' financial statements.

For a prospective franchisee, this means that the financial statements provided in Item 21 of the FDD are prepared with a standard of accuracy that aims to prevent any significant errors or omissions that could mislead someone relying on those statements to make a business decision. The auditor's role is to provide reasonable assurance that the financial statements are free from material misstatement.

However, the FDD also notes that reasonable assurance is not absolute, and there is always a risk that a material misstatement, especially one resulting from fraud, may not be detected during an audit. Therefore, while the financial statements are audited, potential franchisees should still exercise their own due diligence and consider seeking independent financial advice to fully understand the financial health of B Bops.