What auditing standards were used as the basis for the audit opinion for Black Bear Diner?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
An accounting of the operation of the Marketing Fund shall be prepared annually and shall be made available to Franchisee upon request. Franchisor reserves the right, at its option, to require that such annual accounting include an audit of the operation of the Marketing Fund prepared by an independent certified public accountant selected by Franchisor and prepared at the expense of the Marketing Fund.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the Black Bear Diner franchise requires franchisees to contribute to a marketing fund. An accounting of this fund's operation is prepared annually and made available to franchisees upon request. Black Bear Diner retains the option to require an audit of the Marketing Fund's operation, conducted by an independent certified public accountant selected by the franchisor. The expense of this audit is borne by the Marketing Fund itself.
However, the FDD does not specify which auditing standards the independent accountant must use when auditing the Marketing Fund. It only states that an audit may be performed at the discretion of the franchisor.
For a prospective Black Bear Diner franchisee, it would be prudent to ask the franchisor for more details on the circumstances under which an audit of the marketing fund would be required, and what auditing standards would be applied. Understanding the scope and standards of these potential audits can provide additional financial transparency and reassurance regarding the handling of the marketing funds.