What accounting principles must a Churchs Chicken franchisee use when preparing financial statements?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
of its books, records and state and federal tax returns for at least 3 years after the later of preparation or filing (or such longer period as may be required by any governmental entity) and make them available and provide duplicate copies to Cajun within 5 days after Cajun's written request.
- B. Quarterly Reports. Franchisee shall, at Franchisee's expense, submit to Cajun, in the form and format prescribed by Cajun, a quarterly unaudited profit and loss statement and balance sheet for the Franchised Restaurant ("Quarterly Statement") within 30 days after the end of each quarter. Each Quarterly Statement shall contain a certificate signed by Franchisee's president, treasurer or chief financial officer certifying that such Quarterly Statement is true, correct and complete, uses accounting principles applied on a consistent basis, and accurately and completely reflects the financial condition of Franchisee and the results of operations of the Franchised Restaurant du
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, franchisees must adhere to specific accounting principles when preparing financial statements. For quarterly statements, the franchisee's president, treasurer, or chief financial officer must certify that the statement is true, correct, and complete, and that it uses accounting principles applied on a consistent basis. This certification confirms that the financial condition and operational results of the franchised restaurant are accurately reflected during the covered period.
For annual financial statements, which include a profit and loss statement, cash flow statement, and balance sheet, the same certification requirements apply. Additionally, the annual financial statement must be prepared in accordance with United States generally accepted accounting principles (GAAP) upon request from Cajun. This ensures that the financial reporting aligns with standard accounting practices, providing a consistent and reliable view of the franchisee's financial performance.
Churchs Chicken, through Cajun, retains the right to request audited financial statements prepared by a certified public accounting firm acceptable to Cajun, at the franchisee's expense, for any fiscal year or period. This provision allows Churchs Chicken to ensure compliance and accuracy in financial reporting, although it places the financial burden of the audit on the franchisee. Franchisees should factor in potential audit costs when evaluating the overall financial requirements of the franchise agreement.