Are there any notes to the Floors To Go financial statements in Exhibit E?
Floors_To_Go Franchise · 2025 FDDAnswer from 2025 FDD Document
We have audited the financial statements of Floors To Go, LLC (the "Company"), which comprise the balance sheets as of December 31, 2024 and 2023, and the related statements of income and member's equity, and cash flows for the years then ended, and the related notes to the financial statements (the "financial statements").
As described in Note 1 to the financial statements, effective January 1, 2023, the Company adopted Accounting Standards Codification Topic 326, Financial Instruments ‐ Credit Losses. Our opinion is not modified with respect to this matter.
Notes to Financial Statements
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Floors To Go, LLC, a Florida LLC (the "Company"), is in the business of selling franchise licenses and providing various support services to franchisees operating in the retail floor covering industry located throughout the United States.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting year. Actual results could differ from those estimates. Significant estimates include, but are not limited to, the franchisee cashback program accruals.
Revenue Recognition
Revenues are primarily derived from service fees, member advertising fees, and brokerage fees from certain floor and window covering manufacturers utilized by the franchisees. The performance obligation related to these services is met over the terms of the franchise agreement. In certain circumstances fees collected are deferred and recognized over time as the related performance obligations are satisfied.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to the 2025 Floors To Go Franchise Disclosure Document, the audited financial statements for Floors To Go, LLC, included as Exhibit E, have related notes. Specifically, the Independent Auditors' Report refers to these notes as part of the "financial statements."
The notes to the financial statements include details regarding the nature of the business and a summary of significant accounting policies. These policies cover areas such as the use of estimates in preparing the financial statements, cash management, and revenue recognition. For instance, the notes clarify that Floors To Go recognizes revenue from service fees, member advertising fees, and brokerage fees, with performance obligations met over the terms of the franchise agreement. Some fees are deferred and recognized over time as obligations are fulfilled.
One significant accounting policy discussed in the notes is the use of estimates, which requires management to make assumptions affecting the reported amounts of assets and liabilities. A specific estimate mentioned is related to franchisee cashback program accruals, highlighting that actual results could differ from these estimates. Understanding these accounting policies is crucial for a prospective franchisee to assess the financial health and reporting practices of Floors To Go.
Furthermore, the Independent Auditors' Report mentions a change in accounting principle related to Financial Instruments - Credit Losses, which Floors To Go adopted effective January 1, 2023, as detailed in Note 1 to the financial statements. This indicates that the financial statements provide transparency regarding changes in accounting practices that could impact the company's financial reporting.