Were the revenue figures from the Chem Dry Customer Management Software audited or independently verified?

According to Chem Dry's 2024 Franchise Disclosure Document, the revenue figures obtained from the Customer Management Software have not been audited or independently verified. The FDD explicitly states that the figures reflect actual results reported by Responding Franchise Owners but have not been subjected to auditing by Chem Dry itself or any independent certified public accountant. This means that while the revenue data is based on information provided by franchisees using the software, prospective franchisees should be aware that these figures have not been checked for accuracy or compliance with accounting standards.

This lack of verification has important implications for potential Chem Dry franchisees. While the Item 19 financial performance representation can offer insights into possible revenue, the absence of an audit means there is a risk that the reported figures may not be entirely accurate or consistent across all franchisees. Factors such as variations in accounting practices, data entry errors, or differing interpretations of revenue recognition could affect the reliability of the data. Therefore, prospective franchisees should exercise caution when using this information to project their potential earnings.

Given that the figures are unaudited, it is crucial for potential Chem Dry franchisees to conduct their own due diligence. This may involve speaking directly with existing franchisees to gather additional financial information, consulting with a financial advisor to assess the reasonableness of the revenue figures, and carefully reviewing the assumptions underlying the financial performance representation. While Chem Dry will provide written substantiation for the data used to prepare the financial performance representation upon reasonable request, it remains the franchisee's responsibility to evaluate the data's reliability and relevance to their specific circumstances.

In the franchise industry, it is not uncommon for franchisors to present unaudited financial performance data in their FDDs. However, the FDD must clearly state that the data has not been audited, as Chem Dry does. Savvy prospective franchisees understand the implications of unaudited data and take appropriate steps to validate the information before making investment decisions. While the lack of audited financials does not necessarily indicate a problem, it underscores the importance of thorough due diligence and independent verification of financial claims.