What accounting procedures and chart of accounts must a Crawlspace Medic franchisee use?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
- 12.2.1. Franchisee agrees to keep and maintain complete and accurate books and records of its transactions and business operations using the accounting procedures and chart of accounts specified by Franchisor. Franchisee agrees to purchase the Computer Systems specified in Section 12.3 to maintain the records and accounts of the Franchisee to the standards of the Franchisor. Franchisee acknowledges and agrees that the financial data of Franchisee's Franchised Business (i) is owned by Franchisor, (ii) is Franchisor's Proprietary Information, (iii) may be published in franchise disclosure document(s) issued by Franchisor following the Effective Date hereof, and (iv) may be shared with other franchisees in the System.
- 12.2.2. Franchisee shall generate a profit and loss statement monthly based on the Franchisor's required format and process. This statement must be prepared by the tenth (10th) of each month. In addition, on a quarterly or yearly basis as determined by Franchisor, Franchisee will furnish Franchisor a full and complete written statement of income and expense and a profit and loss statement for the operation of the Franchised Business during said period, together with a balance sheet for the Franchised Business, all of which shall be prepared in accordance with generally accepted accounting principles and practice. Franchisee's annual statements and balance sheets shall be prepared
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic FDD, franchisees must adhere to specific accounting practices and utilize a designated chart of accounts as mandated by the franchisor. Franchisees are obligated to maintain comprehensive and precise records of all transactions and business operations, following the accounting procedures and chart of accounts stipulated by Crawlspace Medic. To ensure compliance with these standards, franchisees must acquire and use the computer systems specified by Crawlspace Medic for managing their financial records. Crawlspace Medic retains ownership of the franchisee's financial data, which is considered proprietary information and may be published in franchise disclosure documents or shared with other franchisees within the Crawlspace Medic system.
Each month, Crawlspace Medic franchisees are required to generate a profit and loss statement in the format prescribed by the franchisor, submitting it by the tenth of the following month. Additionally, on a quarterly or annual basis, as determined by Crawlspace Medic, franchisees must provide a comprehensive written statement of income and expenses, along with a profit and loss statement and a balance sheet, all prepared in accordance with generally accepted accounting principles.
Furthermore, the annual financial statements and balance sheets must be prepared and certified by an independent certified public accountant. Franchisees are also required to provide electronic access to their accounting data and files to Crawlspace Medic or a designated third-party vendor upon request. This level of oversight and standardization ensures uniformity and transparency across all Crawlspace Medic franchises, allowing the franchisor to monitor financial performance and maintain consistency within the brand.