What immediate action did Bonchon take upon learning of their accountant's ineligibility?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
On March 28, 2019, we learned that the certified public accountant who had prepared our audited financial statements for 2016-2018 inclusive was actually unqualified to do so by virtue of his failure to satisfy two legal prerequisites mandated by the State of New York (in which state said accountant had his office). As soon as we learned of our prior accountant's ineligibility to issue an audit opinion letter, we immediately ceased all franchise sales activity nationwide and ultimately engaged a successor accounting firm to prepare new audited financial statements for the entire period in question (2016-2018 inclusive). In the course of performing this work, our successor accounting firm further determined that the prior accountant had made a number of accounting errors in connection with the 2016-2018 financial statements audited. The audited financial statements annexed to this Franchise Disclosure Document are true and correct in all respects and our successor accounting firm, whose audit letters appear in the accompanying financial statements, is
Source: Item 3 — LITIGATION (FDD pages 11–12)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, upon discovering that their certified public accountant was unqualified, Bonchon took immediate action. Specifically, Bonchon ceased all franchise sales activities nationwide. This indicates a proactive approach to ensure compliance and protect potential franchisees from making decisions based on potentially flawed financial information.
In addition to halting franchise sales, Bonchon engaged a successor accounting firm to prepare new audited financial statements for the period of 2016-2018. This step demonstrates a commitment to rectifying the situation and providing accurate financial data. The successor firm also identified accounting errors made by the previous accountant, further emphasizing the importance of the corrective measures taken by Bonchon.
The fact that Bonchon voluntarily entered into a Consent Order with the State of Washington, even without admitting or denying the findings, suggests a willingness to cooperate with regulatory bodies. While the order itself didn't impose significant penalties beyond investigative costs of $250, it highlights the potential legal and financial ramifications of using inaccurate financial statements in franchise sales. Prospective franchisees should view Bonchon's response as a sign of responsible corporate governance, although they should also carefully review the corrected financial statements and any related disclosures.