What specific financial statements must be included in the annual financial statement submitted by a Desi District franchisee?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
- (a) Financial Reports. Franchisee shall provide such periodic financial reports as Desi District Franchise Group may require in the Manual or otherwise in writing, including:
- (i) a monthly profit and loss statement and balance sheet for the Business within 30 days after the end of each calendar month;
- (ii) an annual financial statement (including profit and loss statement, cash flow statement, and balance sheet) for the Business within 90 days after the end of Desi District Franchise Group's fiscal year; and
- (iii) any information Desi District Franchise Group requests in order to prepare a financial performance representation for Desi District Franchise Group's franchise disclosure document.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, franchisees are required to submit an annual financial statement that includes a profit and loss statement, a cash flow statement, and a balance sheet. This statement must be submitted within 90 days after the end of Desi District Franchise Group's fiscal year. This requirement ensures that Desi District can monitor the financial health and performance of each franchise location.
In addition to the annual financial statement, Desi District also requires franchisees to submit a monthly profit and loss statement and balance sheet within 30 days after the end of each calendar month. Furthermore, franchisees must provide any information requested by Desi District to prepare a financial performance representation for their Franchise Disclosure Document. This ongoing reporting helps Desi District maintain up-to-date financial information for all franchise locations.
These reporting requirements are typical in the franchise industry, allowing the franchisor to assess the financial stability and performance of its franchisees. It also enables the franchisor to create accurate financial performance representations for potential franchisees, as mandated by the FTC. A prospective Desi District franchisee should be prepared to maintain detailed financial records and submit them according to the specified schedule to remain in compliance with the franchise agreement.