What risk does Angry Chickz acknowledge regarding cash balances exceeding FDIC coverage?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
Concentration of credit risk – The cash balances of the Company are held primarily in one financial institution. If cash balances exceed the amounts covered by the Federal Deposit Insurance Corporation, the excess balances could be at a risk of loss. The Company has experienced no loss or lack of access to cash in its operating accounts and believes it is not exposed to any significant credit risk.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, Angry Chickz acknowledges a potential risk related to its cash balances held in financial institutions. Specifically, if the company's cash balances exceed the coverage provided by the Federal Deposit Insurance Corporation (FDIC), the excess amounts could be subject to a risk of loss.
However, Angry Chickz states that it has not experienced any losses or issues with accessing its cash in operating accounts. The company believes that it is not currently exposed to any significant credit risk related to its cash balances. This suggests that while the risk exists in theory, Angry Chickz has taken measures or has circumstances in place that mitigate this risk.
For a prospective franchisee, this information indicates that Angry Chickz is aware of the importance of managing its cash deposits to ensure they are adequately protected. While the company believes the risk is currently low, it is essential for franchisees to understand this potential risk and consider how it might impact Angry Chickz's financial stability, especially if large cash balances are maintained. Franchisees may want to inquire about Angry Chickz's cash management policies and the specific measures in place to minimize the risk of loss associated with exceeding FDIC coverage.