What accounting principles must Cinnaholic franchisees use when preparing financial reports?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
ir employees, agents, and representatives) of Franchisor in connection with the sale or transfer of any equity interests or assets of Franchisor or any merger, reorganization or similar restructuring of Franchisor.
- 6.2. Reporting. Franchisee must provide Franchisor with those financial reports required by Franchisor from time to time. All such reports shall be prepared (i) using any form documents established by Franchisor as set forth in the Operations Manual or otherwise and (ii) in accordance with the generally accepted accounting principles of the United States, to the extent applicable. Franchisee's current reporting obligations include the following:
- (i) A statement of relevant Gross Sales in the form required by Franchisor to be delivered with each payment of the Royalty Fee and Advertising Fee no later than 5:00 p.m. on each Tuesday;
- (ii) A monthly unaudited balance sheet and profit and loss statement in a form satisfactory to Franchisor covering Franchisee's business for the prior month and fiscal year to date, all of which shall be certified by Franchisee as true and correct and delivered to Franchisor no later than the 21st day of each month;
- (iii) Annual financial statements compiled or reviewed by an independent certified public accountant in a form satisfactory to Franchisor, which shall include a statement of income and retained earnings, a statement of cash flows, and a balance sheet of Franchisee, all for the fiscal year then ended. If Franchisee does not, in the ordinary course, obtain financial statements compiled or reviewed by an independent certified public accountant, then Franchisee may provide internally prepared financial statements which shall be certified as true and correct by Franchisee or Franchisee's principal executive officer or chief financial officer if Franchisee is a partnership, corporation or limited liability company. Franchisor shall have the right at any time to require audited annual statements to be provided to it, at Franchisee's expense;
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, franchisees must adhere to specific accounting principles when preparing financial reports for the franchisor. All financial reports must be prepared in accordance with the generally accepted accounting principles (GAAP) of the United States, to the extent applicable. This ensures consistency and comparability in financial reporting across all Cinnaholic franchise locations.
Cinnaholic requires franchisees to submit several financial reports on a regular basis. These include a statement of relevant Gross Sales, which is due with each payment of the Royalty Fee and Advertising Fee by 5:00 p.m. every Tuesday. Additionally, franchisees must provide a monthly unaudited balance sheet and profit and loss statement covering the prior month and fiscal year-to-date, certified as true and correct, by the 21st day of each month.
Furthermore, Cinnaholic franchisees are required to submit annual financial statements compiled or reviewed by an independent certified public accountant in a form satisfactory to Cinnaholic. These annual statements must include a statement of income and retained earnings, a statement of cash flows, and a balance sheet for the fiscal year. However, if a franchisee does not typically obtain financial statements compiled or reviewed by an independent CPA, they may provide internally prepared financial statements certified by the franchisee or their principal executive officer or chief financial officer. Cinnaholic retains the right to require audited annual statements at the franchisee's expense at any time.