What is the purpose of including Holdco's financial statements in the Beef O Bradys FDD?

According to the 2025 Beef O Bradys FDD, the audited financial statements of Holdco, as of December 31, 2024, December 31, 2023, and December 31, 2022, are included as Exhibit A. Holdco, which is FSC Franchise Holdings, LLC, provides an absolute and unconditional guarantee to assume the duties and obligations of FSC Franchise Co., LLC under the Franchise Agreement if FSC Franchise Co., LLC becomes unable to perform them. This guaranty of performance is also included as Exhibit A in the FDD.

The inclusion of Holdco's financial statements provides prospective Beef O Bradys franchisees with insight into the financial stability of the entity guaranteeing the franchisor's obligations. This is a crucial element of due diligence, as it allows franchisees to assess the guarantor's ability to cover the franchisor's responsibilities should the franchisor falter. By reviewing Holdco's financial statements, potential franchisees can evaluate the level of risk associated with the franchise agreement.

This arrangement is beneficial for franchisees because it offers an additional layer of security. If Beef O Bradys, as the franchisor, encounters financial difficulties and cannot fulfill its obligations, Holdco is legally bound to step in and ensure the terms of the franchise agreement are upheld. This reduces the risk to the franchisee, as they have recourse to another financially stable entity. The financial statements allow the franchisee to gauge the strength of this guarantee.