What is Basecamp Fitness's policy regarding maintaining cash in financial institutions that may exceed federally insured limits?

According to Basecamp Fitness's 2025 Franchise Disclosure Document, the company maintains cash in financial institutions that, at times, may exceed the $250,000 limit insured by the Federal Deposit Insurance Corporation (FDIC). Despite maintaining balances above the insured limit, Basecamp Fitness states that it has not experienced any losses in these accounts and believes it is not exposed to any unusual risk. This indicates that Basecamp Fitness places its cash in major financial institutions and has confidence in their stability.

For a prospective Basecamp Fitness franchisee, this policy suggests that the franchisor is comfortable managing its cash assets in a way that may involve some level of risk, although they consider it minimal. While the FDIC insurance limit provides a safety net up to $250,000, exceeding this limit means that funds above this amount are potentially subject to the financial health of the institution holding the deposits.

This policy is not uncommon for larger companies that need to manage significant cash flow. However, it's important for a potential franchisee to understand the implications and perhaps inquire about the specific financial institutions Basecamp Fitness uses and their risk management strategies. While Basecamp Fitness believes there is no unusual risk, economic conditions can change, and it is prudent to be aware of how the franchisor manages its cash, as it could indirectly affect the franchisee if the franchisor were to experience significant financial losses.