What accounting principles must Baya Bar franchisees use when preparing financial statements?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
12.2 Bookkeeping and Reports.
- 12.2.1 Franchisee agrees to keep and maintain complete and accurate books and records of its transactions and business operations using the accounting procedures and chart of accounts specified by Franchisor. Franchisee agrees to purchase the POS System and other computer systems specified in Section 12.3 to maintain the records and accounts of the Franchisee to the standards of the Franchisor. Franchisee acknowledges and agrees that the financial data of Franchisee's Franchised Business (i) is owned by Franchisor, (ii) is Franchisor's Proprietary Information, (iii) may be published in franchise disclosure document(s) issued by Franchisor following the Effective Date hereof, and (iv) may be shared with other franchisees in the System.
- 12.2.2 Within thirty (30) days after the close of each calendar quarter and within ninety (90) days after the close of each fiscal year, Franchisee will furnish Franchisor a full and complete written statement of income and expense and a profit and loss statement for the operation of the Franchised Business during said period, together with a balance sheet for the Franchised Business, all of which shall be prepared in accordance with generally accepted accounting principles and practice. Franchisee's annual statements and balance sheets shall be prepared by an independent certified public accountant and certified to be correct.
- 12.2.3 The financial statements required hereunder shall be in such form and contain such information as Franchisor may from time to time reasonably designate.
- 12.2.4 Franchisor reserves the right to require Franchisee to engage the services of a third-party accounting services firm, designated and approved by Franchisor, in the event that (i) Franchisee fails to keep books and records in accordance with Franchisor's standards or (ii) Franchisor, in its sole discretion, determines
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, franchisees must adhere to specific accounting practices. Specifically, franchisees are required to maintain complete and accurate books and records of their transactions and business operations, utilizing the accounting procedures and chart of accounts as specified by Baya Bar. To meet these standards, franchisees must purchase the POS system and other computer systems that Baya Bar specifies.
Within 30 days after the close of each calendar quarter and within 90 days after the close of each fiscal year, Baya Bar franchisees must provide a full and complete written statement of income and expense and a profit and loss statement for the operation of the franchised business during said period, together with a balance sheet for the Franchised Business. These financial documents must be prepared in accordance with generally accepted accounting principles and practice. Furthermore, the franchisee's annual statements and balance sheets must be prepared by an independent certified public accountant and certified to be correct.
Baya Bar retains the right to designate the form and content of the required financial statements, and can also require a franchisee to engage a third-party accounting services firm, designated and approved by Baya Bar, if the franchisee fails to keep books and records in accordance with Baya Bar's standards or if Baya Bar determines that the franchisee's books and records are not in compliance with generally accepted accounting principles.