Why can't Punch King Fitness include all required financial statements?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
The franchisor has not been in business for three years or more; and, therefore, cannot include all financial statements required.
THESE FINANCIAL STATEMENTS ARE PREPARED WITHOUT AN AUDIT. PROSPECTIVE FRANCHISEES OR SELLERS OF FRANCHISES SHOULD BE ADVISED THAT NO CERTIFIED PUBLIC ACCOUNTANT HAD AUDITED THESE FIGURES OR EXPRESSED HIS/HER OPINION WITH REGARD TO THE CONTENT OR FORM.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, the franchisor is unable to include all required financial statements because the company has not been in business for three years or more. This is a common situation for newer franchises, as the FDD requires a certain amount of operating history to provide a comprehensive financial picture.
Because Punch King Fitness lacks a full three-year operating history, prospective franchisees should be aware that the financial statements included in the FDD may not be as extensive or detailed as those of more established franchises. The FDD explicitly states that the financial statements are unaudited, meaning they have not been independently verified by a Certified Public Accountant. This adds a layer of risk, as there is no external assurance regarding the accuracy and completeness of the financial information presented.
Given this limitation, it is crucial for potential Punch King Fitness franchisees to conduct thorough due diligence. This includes carefully reviewing the available financial statements, seeking professional financial advice, and asking the franchisor detailed questions about their financial performance, projections, and key assumptions. Understanding the limitations of the financial information and actively seeking additional insights will help franchisees make informed decisions.