What two financial reports must be included in the Financial Statements submitted by a Buona franchisee?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall, at its expense, submit to Franchisor during the Term of this Agreement, unaudited financial statements for the preceding Period and for the preceding fiscal year ("Financial Statements"), together with a certificate executed by Franchisee certifying that such financial statement, as applicable, is true and accurate and such other information in such form as Franchisor may reasonably require.
The foregoing Financial Statements shall include both a profit and loss statement and a balance sheet, and shall be prepared in accordance with generally accepted accounting principles.
Franchisee must furnish Franchisor with any additional financial statements and any tax returns for the Franchised Business within fifteen (15) days after Franchisee's receipt of Franchisor's written request for the information.
In the event Franchisee defaults under this Agreement, Franchisor may require, upon written notice to Franchisee, that all Financial Statements submitted thereafter include a "Review Report" prepared by an independent Certified Public Accountant (CPA).
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, franchisees are required to submit financial statements that include both a profit and loss statement and a balance sheet. These statements must be prepared in accordance with generally accepted accounting principles. This requirement ensures that Buona has a clear and standardized view of each franchise's financial performance.
Submitting these financial statements is a recurring obligation during the term of the franchise agreement. This allows Buona to monitor the financial health of its franchisees, identify potential issues early on, and ensure compliance with the franchise agreement. The financial statements help Buona assess the overall performance of the franchise system and make informed decisions regarding support, training, and resource allocation.
Furthermore, Buona retains the right to request additional financial statements and tax returns from franchisees, providing flexibility to address specific concerns or conduct more in-depth reviews. In cases where a franchisee defaults on the agreement, Buona may require that future financial statements include a "Review Report" prepared by an independent Certified Public Accountant (CPA), adding an extra layer of scrutiny and verification.