Does Beard Papas' cash and cash equivalents ever exceed the FDIC limit?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
t the financial statements were available to be issued. Management has determined that there are no subsequent events required to be recorded or disclosed.
3. Concentrations of Risks
Credit Risk
Financial instruments which potentially subject the Company to concentration of credit risk are primarily cash and cash equivalents, and accounts receivable. The Company places its cash and cash equivalents in accounts with three financial institutions that are participating members of the U.S. Federal Deposit Insurance Corporation ("FDIC"). During the years ended December 31, 2024 and 2023, the Company's cash and cash equivalent balances exceeded the FDIC limit from time to time. The Company's cash and cash equivalents balances as of December 31, 2024, with FDIC member institutions exceeded the total amounts insured by FDIC's general deposit insurance rules
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, Beard Papas's cash and cash equivalents have exceeded the FDIC limit in the past. Specifically, for the years ending December 31, 2024 and 2023, the company's cash and cash equivalent balances exceeded the FDIC limit from time to time. As of December 31, 2024, the excess was approximately $1,119,000, and as of December 31, 2023, the excess was approximately $945,000. Beard Papas places its cash and cash equivalents in accounts with three financial institutions that are participating members of the U.S. Federal Deposit Insurance Corporation ("FDIC").
This means that Beard Papas held significant amounts of cash that were not fully insured by the FDIC during these periods. The FDIC typically insures deposits up to a certain limit per depositor, per insured bank. Exceeding this limit exposes the company to potential losses if a financial institution were to fail. While Beard Papas believes that the concentration of credit risk is limited due to their routine monitoring and assessment of their customers' financial strength, prospective franchisees should be aware of this potential risk.
For a prospective franchisee, this information is relevant because it provides insight into Beard Papas's financial management practices. While the franchisor, not the franchisee, directly manages these cash balances, it reflects on the overall financial health and risk management of the company. Franchisees may want to inquire about the company's strategy for managing cash balances to mitigate risks associated with exceeding FDIC insurance limits. Understanding how Beard Papas manages its finances can help franchisees assess the stability and reliability of the franchise system.