What standards were the Crdn audits conducted in accordance with?

The 2025 Crdn Franchise Disclosure Document outlines Crdn's right to conduct audits of a franchisee's business. Crdn has the right to inspect and audit financial statements, reports, ledgers, income tax records, sales tax records, payroll records, software databases, IRS Form 1099s, and other records related to the Franchised Business and any other business operated in connection with or in support of the Franchised Business.

Crdn franchisees are obligated to cooperate fully with Crdn’s representatives and any independent auditors or accountants hired by Crdn to conduct inspections or audits. Franchisees must allow Crdn or its representatives to copy records of any kind related to the operation and must cooperate in Crdn's inspection and copying, including directing Crdn's representative to the records and responding fully to all inquiries.

The FDD specifies actions Crdn can take if an audit reveals an understatement of gross sales, including debiting the franchisee's account for the Royalty and Fund payments due on the amount of the understatement, plus Late Payment Fees and Late Payment Interest. If the understatement of Royalty is greater than 5% of the total Royalty due on the actual Gross Sales for the audit period, the franchisee must also pay Crdn an additional fee equal to 10% of the total amount of the understated Gross Sales.

The FDD does not specify which accounting standards Crdn's audits are conducted in accordance with. A prospective franchisee should inquire with Crdn about the specific accounting standards and practices used during audits to fully understand the scope and methodology of these audits.