In Atwell Suites' consolidated statements of cash flows, where are amounts related to transactions with affiliates recorded?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
rk. This was superseded on January 1, 2019 by a one-year agreement with automatic one-year extension periods unless either party gives the other notice to terminate. The royalty payment under these agreements of $3.2 million, $3.0 million and $2.8 million was recognized as a deduction to fee business revenue i
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to Atwell Suites' 2025 Franchise Disclosure Document, transactions with affiliates are recorded within operating activities in the consolidated statements of cash flows. Specifically, these amounts are categorized under 'receivables from and payables to affiliates'.
The FDD further clarifies that the ending balance in 'payables to affiliates' in the consolidated balance sheets is $0 because these amounts are subsequently recorded as nonshareholder capital contributions. This means that while Atwell Suites may initially owe money to its affiliates, these debts are ultimately converted into equity contributions, impacting the company's financial structure.
Understanding how Atwell Suites accounts for related-party transactions is crucial for prospective franchisees. These transactions can significantly impact the company's financial statements and overall financial health. Franchisees should be aware of the nature and extent of these transactions, as they could affect the stability and performance of the Atwell Suites franchise system.