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What Kind Of Financial Statements Do I Need For My FDD?

As a franchisor, a Franchise Disclosure Document (FDD) requires you to include the following financial statements:

  • Your latest annual balance sheet, as of the end of the 2 most recent fiscal years;
  • A statement of operations for the 3 most recent fiscal years;
  • A statement of stockholders' equity for the 3 most recent fiscal years; and
  • A statement of cash flows for the 3 most recent fiscal years.

Before submitting this information, these financial statements must be audited by an independent certified public accountant. If you have questions about what must be included, you can get the professional advice of a New York business lawyer.

What If My Franchise Business Is A Start-Up?

If you are in your first year selling business franchises, then obviously you cannot provide what the FDD requires. Therefore, if you are in your first partial or full fiscal year selling franchises, in the FDD you must include an un-audited opening balance sheet.

Charles Internicola

by Charles Internicola
National Business and Franchise Lawyer

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