What happens to intercompany accounts and transactions during the consolidation of City Wide's financial statements?

According to City Wide's 2025 Franchise Disclosure Document, when the company prepares its consolidated financial statements, all significant intercompany accounts and transactions are eliminated. This consolidation includes City Wide Franchise Company, Inc., its wholly-owned subsidiary City Wide Franchise Company of Canada, Inc., and City Wide International Franchise Company, which are collectively referred to as "the Company."

In practical terms, this means that any financial transactions or balances between these entities (City Wide Franchise Company, Inc., City Wide Franchise Company of Canada, Inc., and City Wide International Franchise Company) are removed from the consolidated financial statements. This is a standard accounting practice to prevent the artificial inflation of a company's financial position. For example, if one subsidiary lends money to another, that loan would appear as an asset on the lender's books and a liability on the borrower's books. When consolidated, these are eliminated to show the true financial standing of the overall City Wide organization.

For a prospective City Wide franchisee, this consolidation and elimination of intercompany transactions provides a clearer picture of the financial health and performance of the entire City Wide franchise system. It ensures that the financial statements reflect the true economic activity of the company, without distortion from internal transactions. Franchisees can rely on these consolidated statements to assess the overall stability and profitability of City Wide when making their investment decision.