What is the purpose of including unaudited financial statements in the Stretch Zone FDD?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
EisnerAmper LLP
505 South Flagler Drive Suite 900 West Palm Beach, FL 33401 T 561.832.9292 F 561.832.9455
INDEPENDENT AUDITORS' REPORT
To the Member of Stretch Zone Franchising, LLC:
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Stretch Zone Franchising, LLC (the "Company"), which comprise the balance sheets as of December 31, 2024 and 2023, and the related statements of operations, changes in member's deficit, and cash flows for each of the years then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Stretch Zone Franchising, LLC as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America ("GAAS"). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of these 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 the Company's ability to continue as a going concern for one year after the date that the financial statements are available to be issued.
Auditors' Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements 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.
In performing an audit in accordance with GAAS, we:
- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
Source: Item 3 — Franchisee/Debtor's Warranties. (FDD pages 263–364)
What This Means (2025 FDD)
According to the 2025 Stretch Zone Franchise Disclosure Document, the inclusion of audited financial statements is to provide prospective franchisees with an overview of the company's financial status. An independent auditor's report is included, offering their opinion on the fairness and accuracy of Stretch Zone's financial statements as of December 31, 2024 and 2023. This report confirms that the financial statements accurately reflect Stretch Zone's financial position, results of operations, and cash flows in accordance with generally accepted accounting principles in the United States of America.
The auditor's report outlines the responsibilities of both Stretch Zone's management and the auditors. Management is responsible for preparing the financial statements and maintaining internal controls, while the auditors are responsible for conducting the audit in accordance with generally accepted auditing standards (GAAS) to provide reasonable assurance that the financial statements are free from material misstatement. The audit involves exercising professional judgment, assessing risks, examining evidence, and evaluating accounting policies and estimates.
Furthermore, the auditor's report addresses Stretch Zone's ability to continue as a going concern. Management is required to evaluate conditions or events that could raise substantial doubt about the company's ability to continue operating for one year after the financial statements are issued. The auditors also consider this aspect and provide a conclusion in their report. This assessment is crucial for prospective franchisees as it indicates the financial stability and long-term viability of Stretch Zone.