What was the members' deficit for 360 Painting at the end of 2021?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2023 | 2022 | |
|---|---|---|
| Revenues | ||
| Franchise service fees | $ 17,385,428 $ | 15,264,829 |
| Franchise sales fees | 4,940,724 | 5,651,579 |
| Other revenues | 1,266,744 | 1,028,652 |
| Total revenues | 23,592,896 | 21,945,060 |
| Costs and expenses | ||
| Franchise support expenses | 9,990,315 | 8,680,470 |
| Franchise sales expenses | 5,579,325 | 5,573,085 |
| General and administrative expenses | 4,444,841 | 3,697,732 |
| Transaction costs | 103,047 | 101,430 |
| Depreciation and amortization | 1,671,567 | 1,445,548 |
| Total costs and expenses | 21,789,095 | 19,498,265 |
| Operating income | 1,803,801 | 2,446,795 |
| Interest income | (2,443) | (5,694) |
| Interest expense | 2,540,123 | 1,504,408 |
| Net income | $ (733,879) $ | 948,081 |
**Premium Service Brands, LLC Consolidated
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, the members' deficit at the end of 2021 was $(3,868,608). This figure represents the accumulated losses and distributions exceeding the members' capital contributions up to that point in time. It is important to note that this deficit does not necessarily indicate financial instability, but rather reflects the company's financial performance and capital structure during that period.
For a prospective 360 Painting franchisee, understanding the members' deficit is crucial for assessing the financial health and stability of the franchisor. While a deficit might raise concerns, it is essential to consider the context, including the company's growth stage, investment strategies, and overall financial performance trends. A growing franchise system may incur deficits due to investments in expansion, marketing, and infrastructure development.
It is advisable for potential franchisees to review the complete financial statements, including the balance sheets, income statements, and cash flow statements, to gain a comprehensive understanding of 360 Painting's financial position. Additionally, prospective franchisees should consult with financial advisors and legal professionals to interpret the financial data and assess the potential risks and rewards associated with investing in a 360 Painting franchise. Understanding the franchisor's financial health is a critical step in making an informed decision about purchasing a franchise.
Furthermore, it's important to track how this deficit changes over subsequent years. The FDD shows that the members' deficit was $(5,185,319) at the end of 2023 and $(5,873,114) at the end of 2024. While the deficit increased, it's important to consider the overall financial context and consult with financial professionals to assess the implications for the franchise's financial health.