Hawaii Administrative Rules › Title 16 - DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS › Chapter 37 - RULES UNDER THE FRANCHISE INVESTMENT LAW › Subchapter 2 - FILING OF FRANCHISE OFFERING CIRCULAR › Section 16-37-3 - General filing requirements

Current through June, 2024
(a) Subfranchisor
				offering circular. When a person filing an offering circular is a
				subfranchisor, the circular shall also include the same information concerning
				the subfranchisor as is required from the franchisor.
(b) Financial statements.
(1) Financial statements required to be filed
				in connection with an offering circular shall be prepared in accordance with
				generally accepted accounting principles. Such financial statements shall be
				audited and certified by a certified public accountant, except where the
				particular form or this section permits the use of unaudited
				statements.
(2) A balance sheet of
				the franchisor at the close of the franchisor's last fiscal year preceding the
				date of filing of the offering circular and a profit and loss statement and
				analysis of surplus for the fiscal year ended at the date of the balance sheet,
				together with a balance sheet of the franchisor as of a date within ninety days
				prior to the date of filing of the offering circular and a statement of profit
				and loss for the period from the close of the last preceding fiscal year to the
				date of the balance sheet, both verified by a duly authorized officer of the
				franchisor, if the franchisor has been in existence for less than one year, a
				balance sheet of the franchisor as of a date within ninety days prior to the
				date of filing and a statement of profit and loss for the period from the
				franchisor's organization to the date of the balance sheet shall be filed
				together with the offering circular.
(3) Where a franchisor owns directly or
				indirectly a majority interest of the outstanding voting securities of any
				other corporation, the financial statements required to be filed shall normally
				reflect on a consolidated basis the financial condition of the franchisor and
				all of such subsidiaries.
(4) In
				certain cases the director may waive the requirement for audited statements if
				the statements have been prepared by an independent certified public accountant
				or independent public accountant and the director is otherwise satisfied as to
				the reliability of such statements and as to the ability of the franchisor to
				perform future commitments. Such waiver shall ordinarily be granted only upon a
				showing that the franchisor has not had prior audited statements; that the
				close of the most recent or current fiscal year is so near the time of filing
				of the offering circular that it would be unreasonably costly or impractical to
				provide audited statements with the application; and that audited statements
				will be furnished within a reasonable time after the end of the most recent or
				current fiscal year. In such cases the director may impose an impoundment and
				such other conditions and restrictions as in his discretion may be appropriate.
				In every case where an unaudited statement is to be filed, the person
				requesting approval shall submit to the director, in writing, his reasons
				therefore and obtain the prior written approval of the director.
(5) The use of unaudited financial statements
				as provided herein shall not relieve the applicant or any person from any
				liability for false and misleading statements contained in such financial
				statements.