What must a Cinnaholic franchisee certify regarding the monthly balance sheet and profit and loss statement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a franchisee must certify that their monthly unaudited balance sheet and profit and loss statement are true and correct. These statements must be in a form satisfactory to Cinnaholic and cover the franchisee's business for the prior month and fiscal year to date. The franchisee must deliver these certified financial reports to Cinnaholic no later than the 21st day of each month.
This requirement ensures that Cinnaholic has access to timely and accurate financial information from its franchisees. By certifying the accuracy of these reports, the franchisee is attesting to the validity of the financial data, which Cinnaholic likely uses for performance monitoring, royalty calculations, and overall system management.
The franchisee's certification obligation underscores the importance of maintaining accurate and up-to-date financial records. Failure to provide true and correct financial statements could result in penalties or other consequences as outlined in the franchise agreement. This reporting structure is typical in franchising, allowing the franchisor to maintain oversight and consistency across all franchise locations.
Prospective Cinnaholic franchisees should be prepared to implement robust accounting practices and maintain meticulous records to meet these reporting requirements. They should also understand the implications of certifying financial statements and ensure they have the necessary expertise or resources to comply with this obligation.