What accounting principles must a Management Recruiters franchisee use for bookkeeping and reports?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
10.2. Bookkeeping and Reports. Franchisee agrees to keep and maintain complete and accurate books and records of its transactions and business operations utilizing generally accepted accounting principles in the United States ("U.S. GAAP") consistently applied.
Franchisee agrees to maintain the records and accounts of the Franchise Business throughout the term of the Franchise Agreement and any renewals thereof, and for a period of three years following termination of the franchise agreement, for any reason.
10.2.1. Furnished Statements. Within thirty (30) days after a request by Franchisor, Franchisee will furnish Franchisor with a full and complete set of financial statements including a balance sheet, statement of income, and statement of cash flow for the Franchise Business as of the most recently completed fiscal year and fiscal quarter all prepared in compliance with U.S. GAAP.
10.2.2. Audit. Franchisor has the right at all reasonable times, and up to twelve months after the expiration or termination of this Agreement, to examine or audit, at its expense, Franchisee's books, records, financial statements, bank statements, tax returns, and other documents Franchisor determines it requires for conducting the audit.
Franchisee shall provide Franchisors with copies of all materials requested in the manner requested, including by electronic means, at Franchisee's expense.
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, franchisees must adhere to specific accounting principles for their bookkeeping and financial reporting. Specifically, Management Recruiters franchisees are required to maintain complete and accurate books and records of their transactions and business operations, utilizing generally accepted accounting principles in the United States, or U.S. GAAP, consistently applied. This ensures uniformity and comparability in financial reporting across all franchise locations.
Management Recruiters requires franchisees to maintain these records and accounts throughout the term of the Franchise Agreement, including any renewals, and for a period of three years following the termination of the agreement, regardless of the reason for termination. This retention period allows Management Recruiters to conduct audits and verify financial information as needed. Franchisees must also furnish Management Recruiters with financial statements, including a balance sheet, income statement, and statement of cash flow, within 30 days of a request. These statements must also be prepared in compliance with U.S. GAAP.
Management Recruiters retains the right to examine or audit a franchisee's financial records at any reasonable time and up to twelve months after the agreement's expiration or termination. This includes books, records, financial statements, bank statements, tax returns, and other relevant documents. Franchisees are responsible for providing copies of all requested materials, including electronic copies, at their own expense. This rigorous oversight ensures financial accountability and compliance within the Management Recruiters franchise system.