When preparing Best Western's financial statements, what evaluation is management required to perform concerning the company's ability to continue as a going concern?

According to Best Western's 2025 Franchise Disclosure Document, when preparing the company's financial statements, management is required to evaluate whether there are conditions or events that raise substantial doubt about the company's ability to continue as a going concern for one year after the date that the financial statements are available to be issued. This evaluation considers all conditions and events in the aggregate. This is a standard accounting practice.

This "going concern" assessment is a critical part of financial reporting. It ensures that Best Western's financial statements provide an accurate picture of its financial health and stability. If management identifies conditions that raise substantial doubt, it must disclose these conditions and its plans to address them in the financial statement notes. This allows stakeholders, including potential franchisees, to make informed decisions about their investments.

For a prospective Best Western franchisee, this requirement offers a degree of assurance that the company's financial statements are prepared with due diligence and in accordance with generally accepted accounting principles. It suggests that management is actively monitoring the company's financial health and taking steps to address any potential risks to its long-term viability. Franchisees should review the financial statements and related disclosures carefully to understand any potential risks or uncertainties that could affect Best Western's ability to support its franchisees.