With which financial institutions does Beard Papas place its cash and cash equivalents?
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, the company places its cash and cash equivalents in accounts with three financial institutions. These institutions are participating members of the U.S. Federal Deposit Insurance Corporation (FDIC).
This means that Beard Papas uses banks that are insured by the FDIC, which protects depositors against the loss of their insured deposits if an FDIC-insured bank fails. However, the FDD notes that Beard Papa's cash and cash equivalent balances have, at times, exceeded the FDIC insurance limit. As of December 31, 2024, the company's cash and cash equivalents balances with FDIC member institutions exceeded the total amounts insured by approximately $1,119,000. As of December 31, 2023, this excess was approximately $945,000.
For a prospective franchisee, this indicates that Beard Papas manages a significant amount of cash. While the company uses FDIC-insured banks, the balances sometimes exceed the insured limits, which could pose a risk to the company's assets. Franchisees may want to inquire about Beard Papa's cash management practices and risk mitigation strategies to understand how the company protects its funds beyond the FDIC insurance limits. This is a fairly common situation for larger companies, but prudent financial management is still important.
It's worth noting that the FDD does not name the specific three financial institutions Beard Papas uses, only that they are FDIC members. A prospective franchisee might want to ask Beard Papas directly for the names of these institutions to conduct their own due diligence on the financial health and stability of those banks.