Who must certify the financial statements submitted by an Exit franchisee to Exit and the Subfranchisor?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Within ninety (90) days after the close of Franchisee's fiscal year, as used for federal income tax purposes, Franchisee shall file with EXIT and Subfranchisor a statement, showing the year-end balance sheet and the results of operations for the year including gross sales and revenues for the year, with a comparison to the prior year's
balance sheet and results from operations. Franchisee shall also file with EXIT and Subfranchisor any other reports as EXIT or Subfranchisor may, from time to time, request. All statements shall be certified by Franchisee (or the chief financial officer if Franchisee is not an individual).
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, a franchisee must file a year-end balance sheet and operating results with Exit and the subfranchisor within 90 days of their fiscal year-end. These statements must include gross sales and revenues for the year, compared to the prior year's figures. The franchisee themselves must certify these statements. However, if the franchisee is not an individual but a corporation or other entity, the chief financial officer of that entity must provide the certification.
This requirement ensures that Exit and its subfranchisors receive regular financial updates from franchisees, allowing them to monitor the financial health of the franchise network. By requiring certification, Exit aims to ensure the accuracy and reliability of the financial information provided. This helps Exit to make informed decisions about franchise operations and support.
For a prospective Exit franchisee, this means they will need to prepare and submit annual financial statements to Exit and the subfranchisor. If operating as an individual, the franchisee is responsible for certifying the accuracy of these statements. If operating as a business entity, the chief financial officer will bear this responsibility. Franchisees should maintain accurate financial records throughout the year to facilitate the preparation of these statements and ensure compliance with Exit's reporting requirements.