What reconciliation is required for the annual financial statements submitted by a Bee Organized franchisee?
Bee_Organized Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) Annual Financial Statements and Reports within 60 days of the end of each calendar year, Franchisee shall submit to Franchisor Franchisee's annual financial statements and other reports related to the operations of the Franchised business including, but not limited to, income statement, statement of cash flows, balance sheet, and other operational reports designated by Franchisor. The financial statements must be prepared by a licensed CPA and in accordance with GAAP and, additionally, shall reconcile Gross Sales per GAAP to Gross Sales per this Agreement;
Source: Item 23 — RECEIPTS (FDD pages 54–218)
What This Means (2025 FDD)
According to Bee Organized's 2025 Franchise Disclosure Document, franchisees must reconcile their annual financial statements. Specifically, the financial statements, which must be prepared by a licensed CPA in accordance with Generally Accepted Accounting Principles (GAAP), must reconcile Gross Sales per GAAP to Gross Sales as defined in the Franchise Agreement. This reconciliation ensures that the franchisor and franchisee are aligned on the reported revenue figures, which are often used to calculate royalties and other fees.
This requirement is fairly standard in franchising, as franchisors need accurate and consistent financial reporting from all franchisees to manage the brand and calculate royalties correctly. By requiring a CPA to prepare the statements and reconcile the gross sales figures, Bee Organized aims to ensure the accuracy and reliability of the financial data it receives. This also protects the franchisee by ensuring they have proper accounting practices.
For a prospective Bee Organized franchisee, this means they will need to engage a licensed CPA to prepare their annual financial statements. They will also need to ensure that their CPA understands the specific definition of Gross Sales as outlined in the Bee Organized Franchise Agreement, as this may differ from standard GAAP definitions. The franchisee should factor in the cost of these accounting services when evaluating the overall financial viability of the franchise.