What accounting standard does Christian Brothers Automotive use to analyze the VIEs?

According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, the company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP). This includes the consolidation of all wholly-owned subsidiaries and variable interest entities (VIEs) for which Christian Brothers Automotive has determined it is the primary beneficiary.

For a prospective franchisee, this means that Christian Brothers Automotive's financial reporting follows a standardized and regulated framework. GAAP aims to ensure transparency and consistency in financial reporting, which allows for easier comparison between different companies and across different time periods. The consolidation of VIEs is particularly important as it reflects the full scope of Christian Brothers Automotive's financial obligations and assets, even those held in entities that Christian Brothers Automotive does not directly own but controls.

The use of GAAP provides a level of assurance that the financial information presented by Christian Brothers Automotive is reliable and has been prepared using established accounting practices. Franchisees can review these statements, typically audited by an independent firm, to gain insights into the financial health and performance of the franchisor. Understanding the franchisor's accounting practices can help potential franchisees assess the financial stability and overall risk associated with investing in a Christian Brothers Automotive franchise.

It is important for potential franchisees to consult with their own financial advisors to fully understand the implications of these accounting practices and how they affect the franchisor's financial condition. While GAAP provides a standardized framework, interpreting the financial statements requires expertise and a thorough understanding of accounting principles.