Does Hydrodog acknowledge the potential for actual results to differ from the estimates used in their financial statements?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
Use of Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates are used for, but not limited to, the allowance for credit losses, the recording of ROU assets and liabilities and contingencies. Actual results could differ from these estimates.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, the company acknowledges that actual financial results could differ from their estimates. This acknowledgement is part of their summary of significant accounting policies. The document states that the preparation of financial statements requires management to make estimates and assumptions that could affect the reported amounts of assets and liabilities. These estimates are used for items such as allowance for credit losses, recording of right-of-use (ROU) assets and liabilities, and contingencies.
For a prospective Hydrodog franchisee, this means that the financial statements provided by Hydrodog are based on certain assumptions and estimates made by the company's management. While these estimates are made in accordance with generally accepted accounting principles, there is inherent uncertainty involved, and the actual financial performance of a franchise location could vary. This is a standard disclosure for audited financial statements.
This disclosure highlights the importance of conducting thorough due diligence and not relying solely on the financial statements provided in the FDD. A potential franchisee should consider consulting with a financial advisor or accountant to review the financial statements and understand the assumptions and estimates used in their preparation. It is also advisable to conduct independent market research and develop a realistic financial projection for their specific franchise location, taking into account local market conditions and other factors that could affect financial performance.
Hydrodog had 19 active franchises as of December 31, 2024. The company maintains cash balances at one commercial bank, which at times can exceed the FDIC insured deposit limit of $250,000. The company has not experienced any losses in this account through the date when the financial statements were available to be issued.