What exhibit contains the financial statements for the Apricot Lane franchise?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
| | Income taxes paid | $ | 1,984 | $ | 73,539 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity
Country Visions, Inc. markets franchises for Apricot Lanc Boutique, a fashion and accessory boutique. Franchises generally have an initial ten-year term, with two additional five-year terms at the option of the franchisee. At December 31, 2024 there were 109 franchised stores operating in the United States.
Basis of Accounting
The financial statements are prepared on the accrual method of accounting in accordance with Generally Accepted Accounting Principles in the United States of America (U.S. GAAP).
Revenue Recognition
Revenues from franchise fees are recognized when all services specified by the franchise agreement have been performed, generally when the franchisee's store opens. These services generally include site selection, lease negotiation, marketing, training of the franchisee, training of their employees, and store opening assistance. The initial franchise fee for 2024 and 2023 is $39,500, and the franchise fee for additional stores for an existing franchisee is $20,000.
Income Taxes
The Company has elected to be taxed as an S corporation for federal income tax and California franchise tax purposes. As a result, the Company does not pay federal corporate tax on its income; instead, the stockholders pay tax on their respective shares of such income. California has adopted similar provisions, except that there is a 1.5% franchise tax assessed on California taxable income and a minimum tax of $800. For income tax reporting purposes, the Company reports income on the cash basis of accounting. The Company also withholds and pays income tax in multiple states where required.
Management believes that all of the positions taken by the Company in its federal and state income tax returns are more likely than not to be sustained upon examination. The Company's tax returns are subject to examinations by the Internal Revenue Service and the state authorities, generally for three years and four years, respectively after they are filed.
Cash and Cash Equivalents
The Company considers all short-term investments that are convertible into a known amount of cash, and with an original maturity date of three months or less, to be cash equivalents.
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to the 2025 Apricot Lane FDD, the financial statements for Country Visions, Inc., the franchisor of Apricot Lane, are included. Note 1 in Item 23 summarizes the significant accounting policies of Country Visions, Inc. The financial statements are prepared using the accrual method of accounting, following Generally Accepted Accounting Principles in the United States of America (U.S. GAAP).
Country Visions, Inc. recognizes revenues from franchise fees when all services specified in the franchise agreement have been performed, typically when the franchisee's store opens. These services include site selection, lease negotiation, marketing, franchisee training, employee training, and store opening assistance. For 2024 and 2023, the initial franchise fee is $39,500, while the franchise fee for additional stores for existing franchisees is $20,000.
Country Visions, Inc. has elected to be taxed as an S corporation for federal income tax and California franchise tax purposes. As a result, the company does not pay federal corporate tax on its income; instead, the stockholders pay tax on their respective shares of such income. California has adopted similar provisions, except that there is a 1.5% franchise tax assessed on California taxable income and a minimum tax of $800. For income tax reporting purposes, the company reports income on the cash basis of accounting. The company also withholds and pays income tax in multiple states where required.
Management believes that all of the positions taken by the company in its federal and state income tax returns are more likely than not to be sustained upon examination. The company's tax returns are subject to examinations by the Internal Revenue Service and the state authorities, generally for three years and four years, respectively after they are filed. The company considers all short-term investments that are convertible into a known amount of cash, and with an original maturity date of three months or less, to be cash equivalents.