What are the potential consequences of the estimates made by Carbones Pizzeria differing from actual results?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("US GAAP"), management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates made by the Company are made by the Company the allowance for doubtful accounts and the tax valuation allowance. Actual results could differ from those estimates.
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the company's financial statements rely on estimates and assumptions made by management. These estimates affect the reported amounts of assets, liabilities, revenues, and expenses. Because the financial statements are prepared according to accounting principles generally accepted in the United States of America, management must make these estimates.
The estimates and assumptions are based on historical experience and other factors considered reasonable. However, the FDD states that actual results could differ from these estimates. This means that the financial performance of Carbones Pizzeria, as reflected in their financial statements, could vary from what is projected or expected.
For a prospective franchisee, this highlights the inherent uncertainty in financial forecasting. While Carbones Pizzeria provides financial statements, these are based on estimates that may not perfectly predict future outcomes. Franchisees should be aware that the actual financial performance of their franchise location could deviate from the company's estimates due to various factors not fully accounted for in the initial assumptions.