What are the requirements for annual financial statements if a Cinnaholic franchisee does not obtain compiled or reviewed statements by an independent CPA?

According to Cinnaholic's 2025 Franchise Disclosure Document, if a franchisee does not typically obtain financial statements compiled or reviewed by an independent certified public accountant (CPA), they can provide internally prepared financial statements. These internally prepared statements must be certified as true and correct by the franchisee themselves. If the franchisee is a partnership, corporation, or limited liability company, the certification must be provided by the principal executive officer or chief financial officer.

This means that Cinnaholic franchisees who are small business owners and do not have a need for independently audited or reviewed financials can fulfill their annual reporting obligations with self-prepared statements, as long as they are certified as accurate. This offers a cost-saving alternative to hiring a CPA for a compilation or review, which can be expensive. However, it places the responsibility for accuracy squarely on the franchisee or their designated officer.

It's important to note that Cinnaholic retains the right to require audited annual statements at any time, at the franchisee's expense. This means that even if a franchisee initially submits internally prepared statements, Cinnaholic could later demand a full audit. Franchisees should be aware of this potential cost and factor it into their financial planning. This is not uncommon in franchising, as franchisors often need audited financials for larger business purposes or to ensure compliance and accuracy across the franchise system.