What is the auditor's responsibility in evaluating the accounting policies used by 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)
According to the 2025 FDD, Black Bear Diner may, at its option, require an annual accounting of the Marketing Fund that includes an audit prepared by an independent certified public accountant. This audit, if required, is prepared at the expense of the Marketing Fund.
This means that if Black Bear Diner chooses to have the Marketing Fund audited, an independent CPA will review the fund's financial records. The purpose of this audit would be to verify the accuracy and reliability of the financial information related to the Marketing Fund. The costs associated with this audit are covered by the Marketing Fund itself, which is funded by contributions from franchisees and company-owned restaurants.
For a prospective Black Bear Diner franchisee, this implies that the financial activities of the Marketing Fund are subject to potential independent review. While the FDD does not specify the exact scope or standards of the audit, it generally ensures that a qualified professional assesses whether the accounting policies used for the Marketing Fund are appropriate and consistently applied. Franchisees have the right to request this annual accounting, providing a degree of transparency in how the marketing funds are managed.