What representation does a Kidokinetics franchisee make regarding the accuracy of its financial statements?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee and, at Franchisor's request, each Principal, has provided Franchisor with the most recent financial statements and tax returns of Franchisee and such Principal.
Such financial statements and tax returns shall present fairly the financial position of Franchisee and each Principal, as applicable, at the dates indicated therein and, with respect to Franchisee, the results of its operations and its cash flow for the years then ended.
Franchisee will, at all times, maintain sufficient working capital to fulfill its obligations under this Agreement; and
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, a franchisee makes specific representations regarding the accuracy and completeness of their financial statements. Kidokinetics requires that franchisees and, at Kidokinetics' request, each Principal, provide the most recent financial statements and tax returns. These financial documents must accurately reflect the financial position of the franchisee and each Principal at the dates indicated. Furthermore, the financial statements must accurately represent the results of the franchisee's operations and cash flow for the years then ended.
This requirement ensures that Kidokinetics has access to reliable financial information about its franchisees. This allows Kidokinetics to assess the financial health of individual franchise locations and the overall network. The franchisee also commits to maintaining sufficient working capital to meet their obligations under the Franchise Agreement.
For a prospective franchisee, this means they must be prepared to provide accurate and up-to-date financial records to Kidokinetics. They should also ensure their accounting practices are sound and that their financial statements are prepared in accordance with generally accepted accounting principles. Failure to provide accurate financial information or maintain sufficient working capital could result in a breach of the Franchise Agreement.