Regarding Best Western's consolidated financial statements, what is the potential impact of actual results differing from the estimates made by management?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
Management of the Company has made certain estimates and assumptions relating to the reporting of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with GAAP. Actual results could differ from those estimates.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, the company's management makes estimates and assumptions when preparing the consolidated financial statements in accordance with Generally Accepted Accounting Principles (GAAP). These estimates affect the reported amounts of assets, liabilities, revenues, expenses, and disclosures of contingent items.
The FDD indicates that actual results for Best Western could differ from these initial estimates. This means that the financial performance and position of Best Western, as reflected in its financial statements, could ultimately vary from what was initially projected.
For a prospective franchisee, this highlights the inherent uncertainty in financial reporting. While the financial statements are audited by Ernst & Young LLP, the estimates used in their preparation introduce a degree of variability. Franchisees should understand that these potential differences could impact their assessment of Best Western's financial health and stability. It would be prudent for potential franchisees to discuss these estimates and assumptions with Best Western and their own financial advisors to fully understand the potential implications.