Is the Hyper Kidz Cooperative required to prepare a financial statement?

According to Hyper Kidz's 2024 Franchise Disclosure Document, the Cooperative is not required to prepare a financial statement. However, individual Hyper Kidz franchisees are required to submit financial reports regarding their business operations.

Specifically, franchisees must furnish Hyper Kidz with a Royalty Report, monthly income statements within 15 days after each month's end, quarterly profit and loss statements and balance sheets within 30 days after each quarter, and annual fiscal year-end balance sheets, profit and loss statements, and cash flow statements by April 15th each year. These reports must adhere to generally accepted accounting principles and be signed and verified by the franchisee.

Hyper Kidz retains the right to inspect, audit, and copy all financial records related to the Hyper Kidz Business, with franchisees required to maintain these records for three years. Hyper Kidz also has the right to use and publish information derived from the franchisee's financial statements, including in their Disclosure Document, without providing compensation to the franchisee. This level of financial oversight is typical in franchising, allowing Hyper Kidz to monitor the financial health and performance of its franchise system.