What are the ongoing obligations of an Ella Cafe franchisee (Item 9) related to maintaining accurate financial records and reporting sales data to the franchisor (Item 6)?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
ation on the POS System and other in- Coffee House computer and camera systems. If Franchisor requires Franchisee to connect to such an application, Franchisee agrees to acquire all software licenses needed to use the application (which may require Franchisee to pay periodic subscription fees) and to install and use all hardware needed to connect to the application and to facilitate the exchange of electronic information as contemplated by this Section 10.3.
- 10.4. Maintenance of Records. Franchisee must prepare and preserve for at least five years from the date of preparation complete and accurate books, records, and accounts according to generally accepted accounting principles and in the form Franchisor prescribes. Additionally, and concurrently with the execution of this Agreement, Franchisee must provide Franchisor true and accurate copies of Franchisee's charter documents and governing documents including, as applicable, articles of incorporation, bylaws, operating agreement, partnership agreement, resolutions authorizing the execution hereof, and any amendments to the foregoing. Franchisee must promptly provide such additional information as Franchisor may from time to time request concerning all persons who may have any direct or indirect financial interest in the Business Entity or the Coffee House.
- 10.5. Submission of Financial Statements and Tax Returns. No later than March 31 of each calendar year, Franchisee must provide Franchisor: (a) a copy of the previous year's annual profit and loss statements; (b) a copy of the previous year's sales tax returns; and (c) if requested, a copy of federal and state income tax returns for the previous year; provided, however, that if Franchisee is an individual, not a Business Entity, Franchisee may submit only those schedules to its personal tax returns which reflect the revenues and expenses of the Coffee House.
- 10.6. Submission of Performance Reports. Franchisee must accurately report to Franchisor the Coffee House's Gross Sales and such other financial information as Franchisor may reasonably require using the procedures, methods, and programs that Franchisor prescribes periodically and paying all related costs. Reports will be due on the date prescribed by Franchisor and will be signed by an authorized representative, attesting to their accuracy. Within 30 days following the end of each calendar quarter, Franchisee must provide to Franchisor a copy of the Coffee House's profit and loss statements prepared according to generally accepted accounting principles and which accurately reflect the Coffee House's financial information for the applicable Accounting Periods.
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, franchisees have several ongoing obligations related to maintaining financial records and reporting sales data. Ella Cafe requires franchisees to maintain complete and accurate books, records, and accounts for at least five years, following generally accepted accounting principles and in a format prescribed by the franchisor.
Ella Cafe franchisees must submit financial statements and tax returns to the franchisor annually. No later than March 31 of each calendar year, franchisees must provide a copy of the previous year's annual profit and loss statements and sales tax returns. If requested, they must also provide a copy of federal and state income tax returns for the previous year. However, if the franchisee is an individual and not a business entity, they may submit only those schedules to their personal tax returns that reflect the revenues and expenses of the coffee house.
Furthermore, Ella Cafe franchisees must accurately report the coffee house's gross sales and other financial information as reasonably required by the franchisor, using the prescribed procedures, methods, and programs, and paying all related costs. These reports are due on the date prescribed by Ella Cafe and must be signed by an authorized representative, attesting to their accuracy. Within 30 days following the end of each calendar quarter, franchisees must provide a copy of the coffee house's profit and loss statements prepared according to generally accepted accounting principles, accurately reflecting the coffee house's financial information for the applicable accounting periods. Ella Cafe also retains the right to audit the franchisee's records at any time and may require the franchisee to submit profit and loss statements in a standardized format.