How are misstatements, including omissions, considered material in Ledgers' financial statements?

According to Ledgers' 2025 Franchise Disclosure Document, misstatements, including omissions, are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. This definition is used by the independent auditor when assessing the fairness and accuracy of Ledgers' financial statements.

For a prospective Ledgers franchisee, this means that the financial statements should be free from errors or omissions that could significantly impact their decision-making. The auditor's responsibility is to provide reasonable assurance that the financial statements present fairly the financial position of Loyalty Business Services, LLC. This includes evaluating the appropriateness of accounting policies and the reasonableness of significant accounting estimates made by management.

It is important to note that the auditor's assurance is not absolute, and there is always a risk that a material misstatement may not be detected, especially those resulting from fraud. Therefore, a potential franchisee should carefully review the financial statements and related notes, and if necessary, seek professional advice to fully understand the financial health of Ledgers.