How does Itan account for entities under common control regarding consolidation of variable interest entities?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
Consolidation of variable interest entities - The Company follows the alternative accounting standard for private companies with respect to entities under common control. As such, entities under common control have not been evaluated under the guidance in the variable interest subsections of the Financial Accounting Standards Board ("FASB") ASC 810.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the company follows an alternative accounting standard for private companies regarding entities under common control. This means that Itan does not evaluate these entities under the variable interest subsections of the Financial Accounting Standards Board ("FASB") ASC 810.
For a prospective franchisee, this accounting practice means that the financial statements may not fully reflect the financial positions of entities under common control with Itan. This could potentially obscure the true financial picture of the entire organization, as the performance of related entities is not consolidated.
It is important for potential franchisees to understand the implications of this accounting method. They should consider asking Itan for more detailed information about any entities under common control and how their performance might impact the franchise system. Understanding these relationships can provide a more comprehensive view of the franchisor's financial stability and overall business operations.