Is the annual statement of the Degree Wellness brand development fund audited?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
The Fund will be accounted for separately from our other funds and will not be used to pay any of our general operating expenses, except for salaries, administrative costs, and overhead that we incur in activities reasonably related to the administration of the Fund and its marketing programs, including preparing advertising and marketing materials, and collecting and accounting for contributions to the Fund. We may spend in any fiscal year an amount greater or less than the aggregate contributions to the Fund in that year, and the Fund may borrow from us or other lenders to cover the Fund's deficits or invest any surplus for future use by the Fund. We will prepare an annual unaudited statement of monies collected and costs incurred by the Fund and will provide it to you upon written request. A franchisee may request an annual report of general category spending of the Fund. This report may be requested in writing and will be provided in the manner we determine no more than one time per year and only after March 1 for the prior year. There is no history of a prior fiscal year to disclose in this disclosure document.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 32–42)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, the annual statement of monies collected and costs incurred by the brand development fund is unaudited. However, Degree Wellness will provide this statement to franchisees upon written request. Franchisees can also request an annual report of general category spending of the Fund, which will be provided no more than once per year after March 1 for the prior year.
This means that while franchisees have the right to access information about the fund's financial activity, the information has not been verified by an independent auditor. The lack of an audit may raise concerns about the accuracy and completeness of the financial information provided.
Prospective franchisees should consider the implications of relying on unaudited financial statements and may want to discuss this further with Degree Wellness. It is common practice for larger franchise systems to have their advertising funds audited to ensure transparency and accountability.