What were the total operating expenses for Afuri Ramen Dumpling in the year 2021?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
Direct costs of sales and servicing of franchise agreements are charged to operating expenses as incurred.
Advertising – The Company expenses advertising costs as they are incurred. Advertising expense totaled $12,130 and $15,183 at December 31, 2021 and 2020, respectively.
The Company recorded management fees of $175,279 and $98,000, during the years ended December 31, 2021 and 2020, respectively. The fees include management, consulting, and accounting wages, franchisee training, as well as office rent, insurance, and utilities.
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, Afuri Ramen Dumpling's financial statements include some details on operating expenses. Specifically, the notes mention that direct costs of sales and servicing of franchise agreements are charged to operating expenses as incurred. Additionally, advertising expenses totaled $12,130 in 2021. The company also recorded management fees of $175,279 during the year ended December 31, 2021, which included management, consulting, and accounting wages, franchisee training, as well as office rent, insurance, and utilities.
However, the FDD does not provide a single, aggregated figure for 'total operating expenses' for 2021. Instead, it breaks down certain expense categories. For example, it separately discloses advertising expenses and management fees, offering a glimpse into specific areas where the company spent money. Without a consolidated number, it's difficult to assess the overall cost structure of the franchisor's operations.
For a prospective Afuri Ramen Dumpling franchisee, this means understanding the complete picture of the franchisor's expenses requires further investigation. While the FDD offers some insights, it's essential to ask the franchisor for a comprehensive breakdown of all operating expenses. This would include costs related to salaries, rent, marketing, franchise support, and other overhead. A clear understanding of these expenses is crucial for evaluating the financial health and stability of Afuri Ramen Dumpling and making an informed investment decision.
Therefore, a potential franchisee should request a detailed income statement or profit and loss statement from Afuri Ramen Dumpling, covering at least the past three years. This statement should clearly outline all categories of operating expenses, allowing for a thorough analysis of the franchisor's financial performance and expense management. Understanding these costs will help a franchisee assess the franchisor's financial stability and how efficiently it manages its resources, which can impact the support and services provided to franchisees.