Are there notes to the Baya Bar financial statements?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
We have audited the accompanying balance sheets of Baya Bar Franchise System, LLC as of December 31, 2023, and 2022 and the related statements of operations, members' equity and cash flows for the years ended December 31, 2023, 2022, and 2021, and the related notes to the financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of this financial statement.
The accompanying notes are an integral part of these financial statements.
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Baya Bar Franchise System, LLC ('the Company') was formed as a limited liability company on March 14, 2018, in the State of Delaware .
The Company offers qualified purchasers the right to establish and operate a specialty acai retail and café business model operating under the trade name "Baya Bar." A Baya Bar franchise operates using the franchisor's proprietary products, recipes, formulae, techniques, trade dress, trademarks, and logos.
Revenue from initial franchise fees is allocated to the performance obligations in the franchise agreement that are distinct from the territory rights and symbolic intellectual property. The amount allocated to each identified performance obligation is determined using the expected cost plus a margin or fair market value approach. Revenue from initial fees is recognized when the performance obligation is satisfied and control of the good or service has been transferred to the franchisee. Unearned initial fee revenues will be recorded as non-refundable deferred revenue. Commissions and other direct costs related to unsatisfied performance obligations will be recorded as a franchise acquisition asset and are recognized as expense when the related performance obligation has been satisfied.
The marketing fee is collected weekly and is 1% of the franchisee's gross revenue.
The Company has elected to be taxed as a partnership entity under the provisions of the Internal Revenue Code. Under those provisions, taxable income and losses of the Company are reported on the income tax returns of its members and no provisions for federal or state income taxes have been recorded on the accompanying balance sheet.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 55–56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the financial statements include accompanying notes. These notes are referenced as an integral part of the financial statements, which include the balance sheets, statements of operations, member's equity, and cash flows.
The notes provide additional information and explanations to help clarify and expand on the figures presented in the core financial statements. For instance, Note 1 discusses the nature of Baya Bar's business, its formation as a limited liability company on March 14, 2018, and its operation as a specialty acai retail and café business. It also describes related party transactions and accounting policies.
Specifically, the notes cover significant accounting policies, such as how Baya Bar recognizes revenue from initial franchise fees, which is allocated to performance obligations within the franchise agreement. The notes also detail how the company handles the marketing fund contribution, set at 1% of the franchisee's gross revenue, and its policies regarding income taxes, where the company is taxed as a partnership entity.
Prospective franchisees should carefully review these notes to gain a deeper understanding of Baya Bar's financial reporting practices and the underlying assumptions and policies that affect the financial statements. Understanding these aspects can help franchisees better assess the financial health and stability of the franchise system.