Must the accountant preparing the financial statements for a Gold Star franchisee be acceptable to the company?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
he requirements set forth in Section 9.2.1 above to Gold Star's satisfaction, Gold Star may, at its option, pay an additional contribution from the Brand Building Fund toward grand opening advertising and support.
- 9.5 Company's Assignment Right. The COMPANY shall have the right to delegate its responsibilities and duties under this Section 9 to any designee of its choosing; provided, however, that the right of final approval of all advertising shall be retained at all times by the COMPANY.
10. BOOKS AND RECORDS.
10.1 Maintenance of Records. FRANCHISEE shall maintain true and accurate records, accounts, books and data including but not limited to, sales slips, cash register tapes, cash register tape readings, cash and other return records, sales books, bank books, duplicate deposit slips, inventories, tax returns, financial statements, reports to government authorities, Store records and other evidence of gross revenues and business transactions as required by the COMPANY in the Manual or otherwise in writing (collectively, the "Business Records"), which shall accurately reflect all particulars relating to the Business and which shall be prepared in accordance with generally accepted accounting principles. FRANCHISEE shall submit to the COMPANY within (20) days after the end of each calendar quarter, a balance sheet and profit and loss statement for the calendar quarter most recently ended (with year to date totals), in such form as the COMPANY may require in the Manual or otherwise in writing, certified as true, correc
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees must use an accountant that is acceptable to Gold Star when preparing financial statements. Specifically, franchisees are required to submit a balance sheet and profit and loss statement for each calendar quarter within 20 days of the quarter's end. These statements must be certified as true, correct, and complete, and they must be prepared according to generally accepted accounting principles (GAAP).
This requirement ensures that Gold Star receives financial information prepared to a consistent standard, allowing them to accurately assess the financial health of individual franchise locations and the franchise system as a whole. It also gives Gold Star some control over the quality and reliability of the financial data they receive from franchisees.
If a Gold Star franchisee fails to provide the required financial information within the specified 20-day period, they are subject to an administrative charge of $100 for each month the information is late. This charge is in addition to Gold Star's right to terminate the Franchise Agreement or pursue other remedies for late payment. This provision incentivizes franchisees to comply with the financial reporting requirements in a timely manner.
Beyond the quarterly reports, Gold Star also has the right to request other information and reports concerning the franchisee's business. Gold Star, its agents, or representatives can examine and audit the franchisee's business records at any reasonable time. Additionally, Gold Star can designate a certified public accountant to audit the business records at its own expense, unless the audit reveals an understatement of gross sales of 2% or more for any reporting period, in which case the franchisee must pay the costs of the audit.