Question: What is an Auditor’s Report for a Franchise?Answer:
An Auditor’s Report is a statement of solvency, containing details of the financials of the franchise system. There are two kinds of Auditor’s Reports in franchising, one is in relation to the Marketing Fund, and the other is in relation to the Franchisor’s solvency. In the case of the Marketing Fund, the Auditor’s Report is not always prepared, and therefore one may not be provided. In relation to the Franchisor, an Auditor’s Report is required under item 21 of the Disclosure Document and has to be provided if the Franchisor has not operated for more than 2 years, or if the Franchisor does not provide financial statements to its Franchisees.