Financial Statements: Balance Sheet and Income Statement

A balance sheet reports a company's profit or loss over a specific period of time.

The franchise agreement is a summary of the franchisor's financial status and strength.

A profitable franchisor typically has decreasing revenue trends.

The income statement reports a company's net worth.

The FDD provides information about the franchise agreement's terms and conditions.

Liabilities are a category of the income statement.

Item 8 of the FDD provides information about the franchisor's obligations to the franchisee.

The FDD provides a description of the initial investment required to establish the franchise in Item 10.

The franchisor's obligations to the franchisee are described in Item 9 of the FDD.

Item 12 of the FDD provides information about the franchisor's trademarks and service marks.

The FDD describes the patents and copyrights that the franchisee can use in Item 15.

Item 7 of the FDD provides a reference table that indicates where in the franchise agreement franchisees can find the obligations they have agreed to.

A balance sheet reports a company’s profit or loss over a specific period of time.

A franchise agreement is a summary of a company's financial condition.

Increasing revenue trends of 10% are considered a positive sign on a franchisor's income statement.

A prospective franchisee should review the franchise agreement without consulting a professional advisor.

The income statement is more specific than the balance sheet.

The franchise agreement is a legally binding document that outlines the terms and conditions of the franchise purchase.