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

According to Even Hotels' 2025 Franchise Disclosure Document, when preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the company's ability to continue as a going concern for one year after the date the consolidated financial statements are available to be issued. This evaluation is a standard accounting practice.

This "going concern" assessment is crucial because it affects how Even Hotels recognizes revenues, expenses, assets, and liabilities. If substantial doubt exists, the company may need to disclose this in the financial statements, along with its plans to address the issue. This could involve strategies like cost-cutting, restructuring debt, or seeking additional capital.

For a prospective Even Hotels franchisee, this evaluation provides insight into the financial stability of the parent company. If the parent company were to face financial difficulties, it could impact the support and resources available to franchisees. Therefore, understanding the parent company's going concern assessment is an important part of assessing the overall risk of investing in an Even Hotels franchise.

It is important to note that this assessment is based on conditions and events known at the time the financial statements are prepared. Future events could impact the company's ability to continue as a going concern, even if no substantial doubt existed at the time of the assessment.