What currency does Bath Tune Up use as its functional currency for financial reporting?

According to the 2025 Bath Tune Up FDD, the company's functional currency is the United States dollar. However, Bath Tune Up has franchise locations in Canada, and transactions for those franchises are denominated in Canadian dollars. The financial statements adjust assets and liabilities denominated in foreign currencies to the functional currency, which is the United States dollar, based on the period-end exchange rates. Revenue and expenses are adjusted using the weighted average exchange rates for the respective year. The impact arising from the translation is recorded as a foreign exchange loss or gain on the Statements of Operations.

For a prospective Bath Tune Up franchisee, this means that while the franchise operates primarily in U.S. dollars, the company has experience dealing with foreign currency, specifically the Canadian dollar. This is relevant if a franchisee is considering expanding into Canada or dealing with any cross-border transactions. The FDD indicates that approximately 5% of the company's total revenue was earned from franchises located in Canada as of December 31, 2022.

It's important to note that fluctuations in exchange rates between the U.S. and Canadian dollar could impact Bath Tune Up's reported financial performance. These gains or losses are reflected in the financial statements, providing transparency regarding the effects of foreign currency transactions. Franchisees should be aware of these potential impacts, especially if they have any involvement with the Canadian market or other international transactions.