What is management required to evaluate regarding Hardees' ability to continue as a going concern when preparing the combined consolidated financial statements?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date that the consolidated financial statements are available to be issued.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, when preparing the consolidated financial statements, Hardees's management must evaluate whether any conditions or events, when considered together, create significant doubt about the company's ability to continue operating as a going concern for one year after the consolidated financial statements are issued.
This evaluation is a standard accounting practice, ensuring that the financial statements provide a realistic view of Hardees's financial health. The assessment considers various factors that could impact the company's ability to meet its obligations and continue operations in the foreseeable future. This includes assessing current and expected financial performance, debt obligations, and other relevant factors.
For a prospective Hardees franchisee, this indicates that the franchisor's financial stability is regularly scrutinized. It assures them that Hardees's management and auditors are actively assessing the company's ability to remain viable, which is crucial for the long-term success of their franchise investment. Franchisees should review the financial statements and any related auditor's notes to understand the factors influencing this assessment and Hardees's overall financial health.