On what basis of accounting are the financial statements of Best Brains, Inc. prepared?

According to Best Brains' 2025 Franchise Disclosure Document, the financial statements are prepared using the accrual basis of accounting. This means that revenues are recognized when earned, and expenses are recorded when the obligation is incurred, regardless of when cash changes hands. This approach provides a more accurate picture of the company's financial performance over a period of time compared to cash basis accounting.

For a prospective Best Brains franchisee, understanding the basis of accounting is crucial for interpreting the financial statements provided in the FDD. The accrual method offers a more comprehensive view of Best Brains' financial health, reflecting both current and future obligations and revenues. This can help franchisees assess the financial stability and profitability of the franchisor.

It's important to note that the financial statements included in Item 21 of the FDD are audited by independent CPAs, and their reports express an opinion on the fairness of the presentation in accordance with accounting principles generally accepted in the United States of America. Franchisees should carefully review these audited statements and the accompanying notes to gain a deeper understanding of Best Brains' financial position and performance.