What is the purpose of including the audited opening balance sheet for Cream?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
We have not been in business for 3 years or more, and therefore cannot include all of the financial statements required by the FTC franchise rule. Attached to this Disclosure Document as Exhibit D is our audited opening balance sheet as of May 29, 2025. Our fiscal year ends on the fourth Sunday in the fiscal month of December, except when the fourth week of the fiscal month of December ends before December 31st, in which case our fiscal year is extended by one week.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 60)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, because Cream has not been in business for at least three years, they cannot include all of the financial statements normally required by the FTC franchise rule. Instead, Cream includes its audited opening balance sheet as of May 29, 2025, as Exhibit D to the FDD.
An audited balance sheet offers an independent opinion from an auditor (Plante & Moran, PLLC) regarding the fair presentation of Cream's financial position as of a specific date (May 29, 2025). The auditor's report provides assurance that the balance sheet is free from material misstatement and has been prepared in accordance with accounting principles generally accepted in the United States of America. This helps prospective franchisees gain confidence in the financial stability of the Cream franchise system.
For a prospective Cream franchisee, the inclusion of the audited opening balance sheet provides a snapshot of the company's assets, liabilities, and equity at a specific point in time. While it doesn't offer a complete picture of Cream's financial performance over time (like a full set of financial statements would), it does provide some level of transparency and credibility, given the independent audit. Franchisees can review this balance sheet to assess the company's financial health and make a more informed decision about investing in a Cream franchise.