California Code of Regulations › Title 10 - Investment › Chapter 3 - Commissioner of Financial Protection and Innovation › Subchapter 2.6 - Franchises › Section 310.111.2 - Financial Statement

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
				Financial Statements required to be filed by these rules or by any official
				form of the Department shall be prepared in accordance with generally accepted
				accounting principles. Financial statements should be audited by either an
				independent certified public accountant or independent public accountant,
				except where the particular form or this Section permits the use of unaudited
				statements for interim periods or generally.
(b) The financial statements required to be
				filed by a franchiser refer to a balance sheet as of a date within 90 days
				prior to the date of the application, and profit and loss statements for each
				of the three fiscal years preceding the date of the balance sheet and for the
				period, if any, between the close of the last fiscal year and the date of the
				balance sheet. The balance sheet as of a date within 90 days prior to the date
				of the application need not be audited. However, if this balance sheet is not
				audited, there shall be filed in addition an audited balance sheet as of the
				end of the franchiser's last fiscal year unless such last fiscal year ended
				within 90 days of the date of the application in which case there shall be
				filed an audited balance sheet as of the end of the franchiser's next preceding
				fiscal year. The profit and loss statements shall be audited up to the date of
				the last audited balance sheet filed, if any.
(c) Where a franchiser owns directly or
				indirectly more than 50% of the outstanding voting securities of any other
				corporation, the financial statements required to be filed should normally
				reflect on a consolidated basis the financial condition of the franchiser and
				each of its subsidiaries.
(d) In
				extraordinary cases the Commissioner 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 Commissioner is
				otherwise satisfied as to the reliability of such statements and as to the
				ability of the franchiser to perform future commitments. Such waiver will
				ordinarily be granted only upon a showing that the franchiser 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 application 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 Commissioner
				may impose an impound condition and such other conditions and restrictions as
				in his discretion may be appropriate.
(e) The use of unaudited financial statements
				as provided herein does not relieve the applicant or any person from any
				liability for false and misleading statements contained in such financial
				statements.
1. Renumbering
				  of Section
				  310.111.4 to Section
				  310.111.2 filed 11-21-79;
				  designated effective 1-1-80 (Register 79, No. 47).
2. Amendment
				  filed 10-28-82; effective thirtieth day thereafter (Register 82, No.
				  44).
Note: Authority cited: Section
					 31502,
					 Corporations Code. Reference: Section
					 31111,
					 Corporations Code.