Does Cinnabon independently verify the financial reports submitted by franchisees used to calculate the figures in Item 19?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
We calculated the figures in the tables in these financial performance representations using financial reports submitted by franchisees. We have not audited or independently verified these financial reports nor have we asked questions of the submitting franchisees to determine whether they are in fact accurate and complete, although we have no information or other reason to believe that they are unreliable. No certified public accountant has audited these figures or expressed his or her opinion concerning their content or form.
Source: Item 19 — Financial Performance Representations (FDD pages 100–104)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, the financial figures presented in Item 19 are based on reports submitted by franchisees. However, Cinnabon does not audit or independently verify these reports. This means that Cinnabon relies on the accuracy and completeness of the data provided by its franchisees without conducting its own investigation or assessment. While Cinnabon states that it has no specific reason to believe the reports are unreliable, it does not take active steps to confirm their validity.
For a prospective Cinnabon franchisee, this lack of independent verification has important implications. The financial performance representations in Item 19, such as average net sales, are based on unverified data. Therefore, there is a risk that these figures may not accurately reflect the actual performance of Cinnabon franchises. Franchisees should be aware that their individual results may differ significantly from the figures presented in Item 19, and there is no guarantee of achieving similar sales or earnings.
Given that the financial data is not independently verified, it is crucial for potential franchisees to conduct their own due diligence. Cinnabon encourages prospective franchisees to consult with accounting, business, and legal advisors to assess the potential financial performance of a franchise. Additionally, Cinnabon suggests contacting existing franchisees to discuss their experiences and financial results. This direct communication can provide valuable insights and help potential franchisees make informed decisions.
In the franchise industry, it is not uncommon for franchisors to present unaudited financial performance data. However, some franchisors may choose to conduct independent audits or verification processes to enhance the reliability of the information. The absence of such verification in Cinnabon's case underscores the importance of independent investigation and professional advice for prospective franchisees.