On what accounting basis are the consolidated financial statements of Christian Brothers Automotive prepared?

According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, the consolidated financial statements are prepared using the accrual basis of accounting, following accounting principles generally accepted in the United States of America (GAAP). This means that revenues are recognized when earned and expenses are recognized when incurred, regardless of when cash changes hands.

For a prospective franchisee, this is important because it provides a standardized and transparent view of Christian Brothers Automotive's financial performance. The accrual basis, combined with GAAP, ensures that financial statements are comparable across different periods and with other companies that follow the same standards. This consistency is crucial for making informed investment decisions.

Furthermore, the FDD emphasizes that Christian Brothers Automotive consolidates all wholly owned subsidiaries and variable interest entities (VIEs) for which it is the primary beneficiary. All significant intercompany transactions and balances are eliminated during consolidation, presenting a comprehensive financial picture of the entire organization. This consolidation policy offers a clear understanding of the overall financial health and performance of Christian Brothers Automotive, which can be beneficial for potential franchisees assessing the stability and growth prospects of the franchise system.