On what basis of accounting are the Deka Lash financial statements prepared?

According to the 2024 Deka Lash Franchise Disclosure Document, the company's financial statements are prepared using the accrual basis of accounting. This method adheres to accounting principles generally accepted in the United States of America. The financial statements of DL Franchising, LLC, also include the accounts of DL Brands, LLC and DL Products, LLC, both wholly owned by DL Franchising, LLC, with all significant inter-company transactions and balances eliminated. These limited liability companies have terms of 99 years or sooner as determined by the members.

The accrual basis of accounting recognizes revenues when earned and expenses when incurred, regardless of when cash changes hands. This provides a more accurate picture of a company's financial performance over a period of time compared to cash basis accounting, which recognizes revenues and expenses only when cash is received or paid. The use of generally accepted accounting principles (GAAP) ensures consistency and comparability in financial reporting, which is crucial for potential investors and franchisees.

For a prospective Deka Lash franchisee, this means that the financial information presented in the FDD is prepared in a standardized and transparent manner. This allows for a more informed assessment of the financial health and performance of the franchisor. Understanding the basis of presentation helps franchisees interpret the financial statements accurately and make sound investment decisions. Franchisees can also request an annual unaudited financial statement of the Brand Development Fund, at the expense of the Brand Development Fund, available 120 days after the fiscal year end.