Who must prepare the annual financial statements for Mrcool franchisees?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about MRCOOL Franchising, LLC's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
Based on the 2025 Mrcool Franchise Disclosure Document, the responsibility for preparing financial statements lies with the management of MRCOOL Franchising, LLC, not the franchisee. Specifically, management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America. They are also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
This means that Mrcool franchisees are not directly responsible for preparing the annual financial statements for the franchisor. Instead, Mrcool's management team handles these tasks, ensuring that the financial statements comply with accounting standards. This arrangement is typical in franchising, where the franchisor manages overall financial reporting to maintain consistency and accuracy across the brand.
Prospective franchisees should focus on managing their individual Mrcool Center's financial performance, while the franchisor takes care of the consolidated financial reporting. Franchisees may still need to provide financial data to Mrcool for royalty calculations or other reporting purposes, but they are not tasked with preparing the franchisor's overall financial statements.