What could be the impact if Exit is unable to continue as a going concern?

According to Exit's 2025 Franchise Disclosure Document, if Exit were unable to continue as a going concern, it could impact the company's ability to realize assets at their recognized values and to extinguish liabilities in the normal course of business at the amounts stated in the consolidated financial statements. This means that the value of Exit's assets, such as real estate, equipment, and intellectual property, might be lower than what is currently recorded on their financial statements. Additionally, Exit might not be able to pay off its debts and other obligations in the usual manner or for the amounts currently listed.

For a prospective franchisee, this situation introduces significant risks. If Exit cannot meet its financial obligations, it could lead to a disruption in services and support provided to franchisees. This could include reduced marketing efforts, limited access to technology and training, and potential difficulties in resolving disputes or enforcing the franchise agreement. The value of the franchisee's investment could also be negatively impacted, as the brand's reputation and overall stability would be in question.

Exit has experienced losses from its operations and has net capital deficiencies in 2024, 2023, and 2022, along with consolidated bank overdrafts in 2024 and 2023. However, Exit projects that its 2025 budgeted operations will be sufficient to fund its operations, strategic objectives, and obligations. The company plans to streamline operations by implementing cost-cutting measures. Management believes that these measures will enable Exit to meet its obligations and continue operating for at least one year from the date the consolidated financial statements were available. Because of this, management has determined that there is no substantial doubt about the company's ability to continue as a going concern.

It is important for potential franchisees to carefully review Exit's financial statements and assess the company's ability to maintain its operations. While Exit's management believes they can meet their obligations, the risks associated with the company's past financial performance should be considered. Prospective franchisees should seek professional financial advice and conduct thorough due diligence before investing in an Exit franchise.