Under what condition must a Fitstop franchisee's profit and loss statement and balance sheet be certified by a certified public accountant?

According to Fitstop's 2024 Franchise Disclosure Document, a franchisee's profit and loss statement and balance sheet must be certified by a certified public accountant if Fitstop requests such certification. The franchisee is responsible for covering the expenses associated with their public accountant and certified public accountant consulting with Fitstop regarding these financial statements.

This requirement means that as a Fitstop franchisee, you must be prepared to have your financial records reviewed and certified by a CPA at your own cost if the franchisor deems it necessary. This is in addition to the standard obligation of providing regular financial reports to Fitstop, including monthly gross revenue statements, annual accounts, and monthly revenue figures with quarterly profit and loss statements.

Fitstop also retains the right to inspect and audit a franchisee's accounts, books, records, and tax returns at any reasonable time to ensure compliance with the franchise agreement. If an audit reveals that the franchisee underreported gross revenue by 2% or more, the franchisee will bear the cost of the audit. This highlights the importance of maintaining accurate and transparent financial records as a Fitstop franchisee.

The FDD also states that the franchisee must use an accounting system that incorporates a chart of accounts, methods, procedures, forms and equipment satisfactory to Fitstop. This ensures that all franchisees are using a standardized accounting system, which makes it easier for Fitstop to compare the financial performance of different franchises and to identify any potential problems.