Page 35 - Calculating Lost Profits

 Provisions regarding how to measure damages if the agreement or contract is breached (for ex-
ample, liquidated damages)

 Discussion on how specific accounting terms are defined

 Provisions for certain documents to be maintained (for example, audited financial statements will
be provided six months after year-end, or books and records of the company will be made avail-
able upon request)

 Provisions regarding interest on damages

For example, in the American Kitchen dispute discussed throughout this practice aid, the practitioner
would likely want to understand the relevant terms of the franchise agreement between Franchisor and
Franchisee before estimating lost profits damages related to a wrongful act.

Request, Analyze, and Understand Relevant Documents and Information

The practitioner will often make a request for documents and information to be sought from each side of
the dispute, recognizing that it is normally easier to obtain information from the practitioner’s attorney
client and end client than from the other side. Frequently, requests for information in the form or docu-
ment requests, interrogatories, requests for admission, and deposition questions call for the practitioner
to use judgment in asking for information from the other side, given the likelihood of objections from
the other side on the grounds of relevance, privacy, and difficulty in obtaining and producing the infor-
mation (it is "burdensome"). As a result, the "wish list" often needs to be trimmed to the "acceptable
list." In addition, these requests are often made in the context of discovery requests going in each direc-
tion, with counsel for each side negotiating and bargaining on what will be produced. With that in mind,
practitioners may need to be creative in finding ways to obtain requested information but also careful not
to leave oneself without necessary information.

For the American Kitchen example, documents to request from the parties may include the following:

 The original franchise agreement, as well as any supplements, amendments, or revised versions

 The development plan provided to Franchisor

 The commentary, if any, provided by Franchisor to Franchisee related to the development plan

 Historical financial statements, profit and loss, and sales (for example, by customer, channel, lo-
cation, product type, or product number) and reports for a reasonable period preceding the onset
of the harm, to the present (for example, annual, quarterly, or monthly reports)

 Tax returns, including relevant schedules

 Electronic accounting records, such as a QuickBooks back-up file, if available

 Budgets, forecasts, or projections developed for individual locations from 2009 to the present, if
available

 Actual performance reports of other locations during the period in question (and before, to assist
in establishing comparability)

© 2020 Association of International Certified Professional Accountants 33