What is the significance of the 'Report on Financial Statements' in the context of Del Taco's FDD?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
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process, which included a control related to the review of the revenue growth rate assumptions used in the projected financial information. We evaluated the reasonableness of the revenue growth rate assumptions for the Del Taco brand reporting unit by comparing the revenue growth rate assumptions to industry reports. We also compared the Company's revenue growth rate assumptions to historical revenue growth rate trends to assess the Company's ability to accurately forecast.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to the 2025 Del Taco FDD, the 'Report on Financial Statements' included is an attestation from an independent auditing firm, KPMG LLP, regarding their audit of Jack in the Box Inc.'s consolidated financial statements, which include Del Taco. This report signifies that KPMG LLP has audited the consolidated balance sheets of Jack in the Box Inc. as of September 29, 2024, and October 1, 2023, and the related consolidated statements of operations, comprehensive income, cash flows, and equity for the fiscal years ended September 29, 2024, October 1, 2023, and October 2, 2022. The audit was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States).
The inclusion of this report indicates that the financial statements have been examined by an independent and qualified auditor, providing an additional level of assurance to potential investors and franchisees. KPMG's opinion confirms that the financial statements present fairly, in all material respects, the financial position of Jack in the Box Inc. and its subsidiaries, including Del Taco, as of the specified dates, and the results of their operations and cash flows for the periods then ended, in conformity with U.S. generally accepted accounting principles.
Furthermore, the report mentions specific procedures undertaken by the auditor, such as evaluating the reasonableness of revenue growth rate assumptions for the Del Taco brand by comparing them to industry reports and historical trends. They also performed sensitivity analyses to assess the impact of changes to these assumptions on the fair value estimate. This suggests that the audit involved a detailed review of key assumptions and estimates used in preparing the financial statements, particularly those related to the Del Taco business unit. The auditor states they have served as the Company's auditor since 1986.
For a prospective Del Taco franchisee, this report is significant because it provides confidence in the accuracy and reliability of the financial information presented in the FDD. It assures them that the financial statements have been rigorously examined by an independent expert, reducing the risk of making investment decisions based on inaccurate or misleading information. However, franchisees should still carefully review the entire FDD and conduct their own due diligence to fully understand the financial health and prospects of the Del Taco franchise system.