What is the purpose of the Hck Hot Chicken franchisee submitting financial statements to the franchisor?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
onic devices or systems to gather customer information and comments regarding their experience at the Restaurant, or HCK Hot Chicken Restaurants in general.
SECTION 10. REPORTS, BOOKS AND RECORDS, INSPECTIONS
10.1 General Reporting. Franchisee shall, as and when specified by Franchisor, submit to Franchisor statistical control forms and such other financial, operational and statistical information (by paper, facsimile, email, or other method of transmission) as Franchisor may require to: (i) assist Franchisee in the operation of the Franchised Restaurant in accordance with the System; (ii) allow Franchisor to monitor the Franchisee's Gross Sales, purchases, costs and expenses; (iii) enable Franchisor to develop chain wide statistics which may improve bulk purchasing; (iv) assist Franchisor in the development of new authorized products or the removal of existing unsuccessful Authorized Products; (v) enable Franchisor to refine existing Authorized Products; (vi) generally improve chain wide understanding of the System (collectively, the "Information"). Without limiting the generality of the foregoing:
- 10.1.1 Franchisee will electronically link the Franchised Restaurant to Franchisor and itsthird-party supplier and will allow Franchisor to poll on a daily or more frequent basis.
- 10.1.2 For restaurants not on the "HCK Hot Chicken" Information System, at Franchisor's request, on or before Wednesday of each Week during the Term hereof, Franchisee shall submit a Gross Sales report signed by Franchisee, on a form prescribed by Franchisor, reporting all Gross Sales for the preceding Week, together with such additional financial information as Franchisor may from time-to-time request. If the Franchisee fails to submit any required report when due, Franchisee must pay a fee of $100 per occurrence and $100 per Week until the Franchisee submits the required report, which shall be deposited into the Brand Fund or such other fund as Franchisor may designate.
- 10.1.3 Within 90 days following the end of each calendar year, Franchisee shall submit to Franchisor an unaudited financial statement prepared in accordance with generally accepted accounting principles, and in such form and manner prescribed by Franchisor, which shall be certified by Franchisee to be accurate and complete. Promptly upon Franchisor's request, Franchisee will furnish Franchisor with a copy of each of Franchisee's reports and returns of sales, use, and gross receipt taxes related to the operation of the Franchised Restaurant. Franchisor reserves the right to require such further information concerning the Franchised Restaurants that Franchisor may from time-to-time reasonably request.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, franchisees are required to submit financial information to the franchisor for several key reasons. Hck Hot Chicken requires franchisees to submit statistical control forms and other financial, operational, and statistical data to assist the franchisee in operating the restaurant according to the Hck Hot Chicken system. This allows Hck Hot Chicken to monitor the franchisee's gross sales, purchases, costs, and expenses. This data helps Hck Hot Chicken develop chain-wide statistics that may improve bulk purchasing, assist in developing new authorized products or removing unsuccessful ones, refine existing products, and generally improve the understanding of the Hck Hot Chicken system across the entire chain.
Specifically, franchisees must electronically link their restaurants to Hck Hot Chicken and its third-party suppliers, allowing the franchisor to poll data daily or more frequently. For restaurants not on the Hck Hot Chicken Information System, franchisees must submit a gross sales report weekly, along with any additional financial information requested by Hck Hot Chicken. Additionally, franchisees must submit an unaudited financial statement within 90 days following the end of each calendar year, prepared according to generally accepted accounting principles and certified as accurate and complete. Franchisees must also provide copies of sales, use, and gross receipt tax reports upon request.
These reporting requirements enable Hck Hot Chicken to maintain oversight of the financial health and operational consistency of its franchise locations. The franchisor can use this information to identify areas where franchisees may need support, optimize supply chain management, and make informed decisions about product development and marketing strategies. Franchisees should be aware of these reporting obligations and ensure they have the necessary systems and processes in place to comply with Hck Hot Chicken's requirements. Failure to submit reports on time can result in fees of $100 per occurrence and $100 per week until the report is submitted.