What is Fly Fitness management required to evaluate when preparing financial statements?

According to Fly Fitness's 2024 Franchise Disclosure Document, when preparing financial statements, the company's management must assess whether there are conditions or events that, when considered together, raise significant concerns about Fly Fitness's ability to continue operating as a going concern within one year from when the financial statements are issued.

This evaluation is a standard accounting practice, ensuring that the financial statements provide an accurate representation of the company's financial health and stability. It requires Fly Fitness's management to consider various factors that could impact the company's ability to meet its obligations and continue operations in the foreseeable future. These factors may include current and projected financial performance, access to capital, and any significant risks or uncertainties that could affect the business.

For a prospective Fly Fitness franchisee, this requirement offers some assurance that the franchisor's financial stability is regularly assessed. If there are significant doubts about the company's ability to continue as a going concern, this would be disclosed in the financial statements, alerting potential investors and franchisees to the increased risk. This evaluation helps ensure transparency and allows franchisees to make informed decisions about investing in a Fly Fitness franchise.