What accounting standards must a Learningrx franchisee use when preparing financial reports?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee must keep accurate records relating to the franchised Business for a period of six (6) years after the termination or expiration of this Agreement.
- 11.2 Records Standards. Franchisee must prepare all financial reports in accordance with generally accepted accounting principles, consistently applied, in a form approved by Franchisor. Franchisee must periodically deliver to Franchisor copies of accounting, tax and other documents and information, within ten (10) business days of Franchisor's requests. Franchisee must provide Franchisor with a copy of its annual financial statements including a profit and loss statement and a balance sheet containing complete notes and disclosures. Such statements must be compiled by an independent Certified Public Accountant and be delivered to Franchisor within ninety (90) days after Franchisee's fiscal year end.
- 11.3 Audits. Franchisee must provide Franchisor or its agents access to Franchisee's Business and computer systems to examine or audit Franchisee's Business, at any reasonable time without notice. Franchisor will bear the cost of the audit, unless Franchisee fails to report as required or understates Gross Revenue by two percent (2%) or more for any reported time period, in which case Franchisee will pay the audit cost plus interest on understated costs of one percent (1%) per month. Franchisee must immediately pay to Franchisor all sums owed in addition to any other remedies provided in this Agreement or by law.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, franchisees must adhere to specific accounting standards when preparing financial reports. Franchisees are required to prepare all financial reports in accordance with generally accepted accounting principles, consistently applied. This ensures uniformity and comparability in financial reporting across all Learningrx franchise locations.
In addition to adhering to generally accepted accounting principles, Learningrx franchisees must provide copies of accounting, tax, and other relevant documents to Learningrx within ten business days of the franchisor's request. Franchisees must also furnish Learningrx with annual financial statements, including a profit and loss statement and a balance sheet, complete with notes and disclosures. These statements must be compiled by an independent Certified Public Accountant and submitted to Learningrx within ninety days after the franchisee's fiscal year end.
Learningrx also retains the right to audit a franchisee's business and computer systems at any reasonable time without prior notice. While Learningrx typically bears the cost of such audits, the franchisee is responsible for covering the audit expenses if they fail to report as required or understate gross revenue by two percent or more for any reported period. In such cases, the franchisee must also pay interest on the understated costs at a rate of one percent per month, along with any other sums owed to Learningrx.