With how many financial institutions that are participating members of the U.S. Federal Deposit Insurance Corporation (FDIC) 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 that are participating members of the FDIC. This indicates that Beard Papas uses a limited number of banking institutions for its cash management.
For a prospective franchisee, this information is relevant because it provides insight into Beard Papas's financial practices. While using a small number of banks may simplify administrative tasks for the franchisor, it also concentrates risk. If one of these banks were to face financial difficulties, Beard Papas's funds could be affected.
The FDD also notes that Beard Papa's cash and cash equivalent balances have exceeded the FDIC insurance limit in the past. Specifically, as of December 31, 2024, the balances exceeded insured amounts by approximately $1,119,000, and as of December 31, 2023, the excess was approximately $945,000. This means that a portion of Beard Papa's cash holdings is not fully protected by FDIC insurance, exposing the company to potential losses in the event of a bank failure. Franchisees may want to inquire about Beard Papa's risk management strategies related to these uninsured funds.