What is the required basis of accounting for the financial statements that Itan franchisees must prepare?

According to Itan's 2025 Franchise Disclosure Document, the company prepares its financial statements using the accrual method of accounting. This method conforms with generally accepted accounting principles (GAAP) in the United States.

The accrual method recognizes revenues when earned and expenses when incurred, regardless of when cash changes hands. This provides a more accurate picture of a company's financial performance over a specific period compared to the cash method, which recognizes revenues and expenses only when cash is received or paid.

For a prospective Itan franchisee, this information is relevant because it indicates the level of financial sophistication expected in managing their business. While the FDD specifies the accounting method used by the franchisor, it does not explicitly state the accounting method required for franchisees. Understanding the franchisor's accounting practices can provide insight into the financial reporting and management expectations for the franchise system as a whole. Franchisees may need to consult with financial professionals to ensure they meet any specific accounting requirements set by Itan or comply with generally accepted accounting principles.