Under what condition can Cinnaholic require a franchisee to provide audited annual statements, and who bears the expense?

According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic has the right to require franchisees to provide audited annual statements at any time. These statements must be provided in a form satisfactory to Cinnaholic. The franchisee is responsible for covering the expense of these audits.

This means that as a Cinnaholic franchisee, you may need to obtain and pay for an independent audit of your financial statements if Cinnaholic requests it. This is in addition to the standard requirement to provide annual financial statements compiled or reviewed by an independent certified public accountant. If a franchisee does not typically obtain financial statements compiled or reviewed by a CPA, they can initially provide internally prepared statements certified as true and correct by the franchisee or their principal executive officer or chief financial officer.

The franchisor's right to request an audit at any time gives them a tool to ensure financial compliance and accuracy across all franchise locations. While the franchisee bears the cost, this also ensures the franchisee can select their own auditor. Franchisees should factor in the potential cost of an audit when considering the overall financial investment of a Cinnaholic franchise.

It is important for prospective franchisees to understand this potential financial obligation and to discuss with Cinnaholic the circumstances under which an audit might be required. Understanding the franchisor's expectations and potential triggers for an audit can help franchisees prepare and manage their business finances effectively.