Is the annual statement of the Extreme Art Studio Brand Fund audited?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
- 9.3.6 We will prepare an annual, unaudited statement of Brand Fund collections and expenses, and give you the statement upon written request.
The Brand Fund is not audited.
We will provide an annual accounting for the Brand Fund that shows how the Brand Fund proceeds have been spent for the previous year upon written request.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, the annual statement of the Brand Fund is not audited. While Extreme Art Studio will account for the Brand Fund separately from its other funds, and the Brand Fund itself is not considered an asset of Extreme Art Studio, the annual financial statement prepared for the Brand Fund will be unaudited. However, Extreme Art Studio will provide franchisees with an annual accounting of the Brand Fund's collections and expenses upon written request.
This means that prospective Extreme Art Studio franchisees will not receive a certified audit of the Brand Fund's financial activities. Instead, they will receive an unaudited statement prepared by Extreme Art Studio. While this statement will detail the collections and expenses of the Brand Fund, it will not have the assurance that comes with an independent audit by a certified public accounting firm.
Franchisees should be aware that the Brand Fund may spend more or less than the total contributions in any given year, and may borrow funds or invest surpluses. The Brand Fund is used to maximize recognition of the Extreme Art Studio brand. Given that the Brand Fund is not audited, franchisees may want to pay close attention to the annual statement provided by Extreme Art Studio and direct any questions or concerns to the franchisor.