Who must prepare the annual statements and balance sheets for a Crawlspace Medic franchise?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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
by an independent certified public accountant and certified to be correct. Franchisee must make their accounting data/files available electronically to the Franchisor or a designated third-party vendor at any time requested by Franchisor.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to Crawlspace Medic's 2024 Franchise Disclosure Document, franchisees are required to furnish the franchisor with a full and complete written statement of income and expense, as well as a profit and loss statement, on a quarterly or yearly basis as determined by the franchisor. These financial documents must cover the operation of the franchised business during the specified period. Additionally, franchisees must provide a balance sheet for the franchised business.
All of these financial statements must be prepared in accordance with generally accepted accounting principles. Crucially, the franchisee's annual statements and balance sheets must be prepared by an independent certified public accountant (CPA) and certified to be correct.
This requirement ensures that Crawlspace Medic receives accurate and reliable financial information from its franchisees. It also places a financial burden on the franchisee, who must factor in the cost of hiring a CPA to prepare these statements. Franchisees must also make their accounting data/files available electronically to the Franchisor or a designated third-party vendor at any time requested by Franchisor.
Prospective franchisees should consider the ongoing costs of engaging a CPA when evaluating the overall financial viability of a Crawlspace Medic franchise. They should also inquire about the specific format and process required for the profit and loss statements to ensure they can comply with the franchisor's requirements.