What accounting and disclosure alternatives has Buildingstars elected to apply regarding entities under common control?

According to Buildingstars' 2025 Franchise Disclosure Document, regarding entities under common control, Buildingstars has elected to apply the alternative accounting and disclosures provided to private companies by generally accepted accounting principles. This specifically relates to entities under common control. As a result, the entities disclosed in Note 7 of the financial statements have not been evaluated under the specific guidance for variable interest entities.

In simpler terms, Buildingstars has chosen to use accounting methods and disclosures that are available to private companies when dealing with entities that are under common control, meaning they have the same ownership. This election affects how Buildingstars accounts for and reports its relationships with these related entities.

For a prospective franchisee, this means that the financial statements may not provide the same level of detail or analysis regarding these related entities as would be required if Buildingstars used the standard accounting guidance for variable interest entities. It is important for potential franchisees to understand that this election could impact the transparency and comparability of Buildingstars' financial statements, particularly concerning its relationships with commonly controlled entities. Note 7 of the FDD provides further information on these entities.

Prospective franchisees should carefully review Note 7 and consider asking Buildingstars for additional information or clarification regarding these relationships to fully understand the potential financial implications. Understanding these relationships is crucial for assessing the overall financial health and stability of Buildingstars.