Under what condition is a Boulder Designs franchisee required to have their financial statements compiled, reviewed, or audited by a certified public accountant?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall fill out and submit a Quality Control Data Sheet for every job completed. These reports are due annually July 31 for all projects January 1st through June 30th and the report is due annually January 31st for all projects done between July 1st through December 31st of the prior year.
Franchisee shall submit the Local Marketing Report annually along with the Gross Revenue Reports as stated in Section 12.3. Franchisee shall submit to Franchisor copies of all state sales tax returns that are required to be filed with the appropriate governmental agency and such other records as Franchisor may reasonably request from time to time or as specified in the Manual. Franchisor shall have the right to release financial and operational information relating to the Franchised Business to Franchisor's prospective franchisees, Franchisor's lenders or prospective lenders, as required with respect to offering Franchisor's or its Affiliate's securities to the public or as required to sell, merge or in any other manner transfer Franchisor's assets or any type of certificates representing an ownership interest in Franchisor. Franchisee shall certify as true and correct all reports to be submitted pursuant to this Agreement. Franchisor may in its sole discretion require the reports pursuant to this Section 12.5 are submitted on a monthly basis upon written seven-day notice to the Franchisee.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the excerpts provided do not specify any conditions under which a Boulder Designs franchisee is explicitly required to have their financial statements compiled, reviewed, or audited by a certified public accountant (CPA). The document does outline various reporting requirements, including Quality Control Data Sheets, Local Marketing Reports, and state sales tax returns, but it does not state that these reports need to be prepared or certified by a CPA.
However, Section 12.5 mentions that the franchisee must certify as true and correct all reports submitted to the franchisor. While this implies a level of responsibility for the accuracy of the financial information, it does not mandate a professional review or audit. The franchisor also retains the right to inspect the franchisee's business and conduct audits to ensure compliance with required payments and standards, as detailed in Section 6.6. These audits would likely be performed by the franchisor or their representatives, not necessarily requiring the franchisee to engage a CPA independently.
Prospective Boulder Designs franchisees should clarify with the franchisor under what specific circumstances, if any, they would need to have their financial records professionally compiled, reviewed, or audited. Understanding the potential costs and requirements associated with these services is crucial for financial planning and ensuring compliance with the franchise agreement.