Who must prepare or compile the annual financial statements for a Beauty Bungalows franchise?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
chisor. Franchisee must maintain its accounting using the software programs we designate (or other software as specified in the Manual) and using the account types as specified by Franchisor from time to time. Franchisee must submit to Franchisor current financial statements and other reports as Franchisor may reasonably request to evaluate or compile research data on any operational aspect of the Franchise. Franchisor reserves the right to require that Franchisee make available its sales records and files by way of an Internet connection. Business Records will specifically also include, without limitation, the following:
- (a) tax returns;
- (b) profit and loss statements detailing Gross Revenue and expenses for the period, to be prepared each month for the preceding month and quarterly for the prior quarter;
- (c) profit and loss statements, prepared or compiled annually by an independent Certified Public Accountant annually; and
- (d) balance sheets, to be prepared or compiled at least annually by an independent Certified Public Accountant.
Franchisee must keep accurate records relating to the franchised Business for a period of six (6) years after the termination or expiration of this Agreement. All reports are due in accordance with the due date prescribed by Franchisor.
Source: Item 22 — CONTRACTS (FDD pages 47–48)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, the franchisee is required to submit current financial statements and other reports to Beauty Bungalows as reasonably requested. Specifically, the franchisee must provide Beauty Bungalows with a copy of its annual financial statements, including a profit and loss statement and a balance sheet containing complete notes and disclosures.
These annual financial statements, including the profit and loss statement and balance sheet, must be prepared or compiled by an independent Certified Public Accountant (CPA). The franchisee is responsible for ensuring that these statements are delivered to Beauty Bungalows within ninety (90) days after the franchisee's fiscal year end.
This requirement ensures that Beauty Bungalows receives accurate and reliable financial information from its franchisees, allowing them to evaluate the financial performance of individual franchises and the overall health of the Beauty Bungalows system. It also helps Beauty Bungalows to compile research data on various operational aspects of the franchise. The use of an independent CPA adds credibility to the financial statements, as the CPA is expected to provide an unbiased assessment of the franchisee's financial performance.