Is the Brand Fund's financial statement audited by Chocolate Fish Coffee?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
edures for our system.
- F. Brand Fund. We will administer the Brand Fund (Section 5.5). We will prepare an unaudited annual financial statement of the Brand Fund within 120 days of the close of our fiscal year and will provide the financial statement to you upon request. (Section 9.3)
- G. Website. We will maintain a website for the Chocolate Fish Coffee brand, which will include your business information and telephone number. (Section 5.5)
Advertising
Our obligation. We will use the Brand Fund only for marketing and related purposes and costs. Media coverage is primarily local. We use outside vendors and consultants to produce advertising.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 20–27)
What This Means (2024 FDD)
According to the 2024 Chocolate Fish Coffee FDD, the Brand Fund's financial statements are not audited. Instead, Chocolate Fish Coffee will prepare an unaudited annual financial statement of the Brand Fund within 120 days of the close of their fiscal year. This financial statement will be made available to franchisees upon request.
This means that the financial information provided regarding the Brand Fund is prepared internally by Chocolate Fish Coffee and has not been independently verified by a third-party auditor. While this is not uncommon for smaller or newer franchise systems, it does place a greater burden on the franchisee to review the statements carefully and ask questions about any discrepancies or concerns.
Prospective franchisees should be aware that unaudited statements carry a higher risk of inaccuracy compared to audited statements, which undergo rigorous examination by independent accounting professionals. It would be prudent for potential Chocolate Fish Coffee franchisees to carefully scrutinize these unaudited financial statements and seek clarification from the franchisor on any aspects that are unclear or raise concerns. Understanding how the Brand Fund is managed and how the contributions are spent is crucial, and franchisees should feel comfortable with the level of transparency provided.