Are the Best Western financial statements consolidated?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
**, the parties have executed and delivered this Rider effective on the Effective Date stated in the Regulatory Documents.
MEMBER: LICENSOR: [INSERT MEMBER ENTITY], a [INSERT TYPE OF ENTITY] Best Western International, Inc., an Arizona nonprofit corporation Executed on: Executed on:
EXHIBIT E TO FDD
FINANCIAL STATEMENTS
Report of Independent Auditors
To the Board of Directors and Members of Best Western International, Inc.
Opinion
We have audited the consolidated financial statements of Best Western International, Inc. (the Company), which comprise the consolidated statements of financial position as of November 30, 2024 and 2023, and the related consolidated statements of revenues and expenses, other comprehensive revenues and expenses, cash flows and changes in net assets for the years then ended, and the related notes (collectively referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company at November 30, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.
Source: Item 21 — Financial Statements (FDD page 107)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, the financial statements are consolidated. The Report of Independent Auditors states that Ernst & Young LLP audited the consolidated financial statements of Best Western International, Inc. These statements comprise the consolidated statements of financial position as of November 30, 2024 and 2023, and the related consolidated statements of revenues and expenses, cash flows, and changes in net assets for the years then ended.
The FDD further clarifies the principles of consolidation applied in preparing these statements. The consolidated financial statements include the accounts of Best Western, its wholly-owned subsidiaries, and entities in which Best Western has a controlling financial interest, including variable interest entities where Best Western is the primary beneficiary. This means that the financial performance and position of these related entities are combined into a single set of financial statements, providing a comprehensive view of Best Western's overall financial health.
The document also specifies that all significant intercompany transactions and balances are eliminated during the consolidation process. This ensures that the consolidated financial statements present an accurate picture of Best Western's financial performance without inflating figures due to internal transactions. This approach is standard practice in consolidated financial reporting, aiming to provide stakeholders with a clear and reliable view of the organization's financial status.
For a prospective Best Western franchisee, the consolidated nature of the financial statements means they are reviewing a comprehensive financial picture of the entire Best Western organization, including its subsidiaries and controlled entities. This can offer insights into the overall financial stability and performance of the Best Western network, which can be useful in assessing the strength and viability of the franchise system.