FDD audits
Greywood CPA audits franchisors' financial statements for Item 21 of the Franchise Disclosure Document (FDD). Under the FTC Franchise Rule, a franchisor's FDD must include financial statements prepared under U.S. GAAP and audited by an independent CPA under U.S. generally accepted auditing standards. We are a licensed CPA firm (Virginia Board of Accountancy firm license #134961) working nationwide, at a fixed fee.
Established franchisors generally include audited balance sheets for the last two fiscal year-ends and audited statements of operations, equity and cash flows for each of the last three fiscal years. The FDD must be updated within 120 days after fiscal year-end, so the audit has to be finished in time for your attorney to file and register the renewal.
Last reviewed: November 2026
| Statement | Periods |
|---|---|
| Balance sheet | Audited, as of the end of each of the last two fiscal years |
| Statements of operations, equity and cash flows | Audited, for each of the last three fiscal years |
| Unaudited interim statements | Sometimes needed, for example when a state asks or the FDD is issued well after year-end |
Start-up franchisors can generally phase in audited statements. See start-up franchisor financial statements.
If a parent company guarantees the franchisor's obligations or commits to perform post-sale obligations, the parent's financial statements are generally required too. A franchisor can sometimes use an affiliate's audited statements instead of its own when that affiliate absolutely and unconditionally guarantees the franchisor's duties, with the guarantee included in the FDD. We help you choose the structure with your franchise attorney before the audit is planned.
| Weeks after year-end | What happens |
|---|---|
| 1–3 | Books closed, deferred revenue and fund schedules updated |
| 3–8 | Audit fieldwork |
| 8–11 | Draft statements reviewed, opinion issued |
| By day 120 | Attorney finalizes and files the FDD renewal in registration states |
Registration states may take weeks to approve a renewal, so the earlier the audit finishes, the less risk of a sales gap.
A 30-minute call about your organization, who needs the report and your deadline.
Scope, report type, timeline and one fixed fee, in writing.
Everything we need, uploaded through a secure portal.
Remote testing, then a draft for your review.
A CPA partner signs, and we walk you or your board through the results.
Yes, for the Franchise Disclosure Document. Item 21 of the FTC Franchise Rule requires financial statements prepared under U.S. GAAP and audited by an independent CPA, with a phase-in available to start-up franchisors.
Generally audited balance sheets for the last two fiscal year-ends and audited statements of operations, equity and cash flows for each of the last three fiscal years.
Within 120 days after the close of the franchisor's fiscal year, which includes the new audited financial statements.
Sometimes. If an affiliate or parent absolutely and unconditionally guarantees the franchisor's obligations, its audited statements may be used, with the guarantee included in the FDD. If a parent guarantees obligations, its statements are generally required.
We quote one fixed fee in writing before any work starts, based on the number of entities, units and the complexity of your fee and fund arrangements.
Tell us your fiscal year-end. A senior CPA will send a fixed-fee proposal within 1–3 business days.