When preparing Embassy Suites' financial statements, what is management required to evaluate regarding the company's ability to continue as a going concern?

According to the 2025 FDD, when preparing Embassy Suites' financial statements, management must evaluate whether there are conditions or events that raise substantial doubt about the company's ability to continue as a going concern within one year after the date the financial statements are available to be issued. This evaluation is a critical part of ensuring the financial statements provide a fair and accurate representation of the company's financial health. This assessment is conducted considering all conditions and events in the aggregate.

This requirement aligns with standard accounting practices, ensuring that financial statements provide transparency regarding the company's viability. By assessing the company's ability to continue as a going concern, management provides stakeholders with insights into potential risks and uncertainties that could impact the company's future operations. This evaluation is essential for maintaining investor confidence and ensuring responsible financial reporting.

For a prospective Embassy Suites franchisee, this indicates that the financial statements included in the FDD are prepared with a focus on assessing the company's long-term financial stability. It is important to review these financial statements and any related disclosures carefully to understand the company's financial position and its ability to meet its obligations. Franchisees should also consider asking the franchisor about the specific factors considered in the going concern assessment and any potential risks that could impact the company's future performance.