What is the significance of the 'Due from affiliate' entry in Belocal's financial statement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
d June 30, 2025, 2024 and 2023, respectively.
During the years ended June 30, 2025, 2024 and 2023, the Company's affiliate N2 Company provided accounting, marketing and other operating services for the Company. These costs are included in management fees in the statements of operations and were $6,624,000, $6,048,000 and $4,800,000 for the years ended June 30, 2025, 2024 and 2023, respectively.
As of June 30, 2025 and 2024, the Company had an amount of $4,217,245 and $3,998,969, respectively, due from its affiliate. Had these transactions occurred as unrelated third party transactions, the financial results may have varied significantly.
6. Income Taxes
The provision for income taxes consists of the following for the years ended June 30:
| Name | Ownership Interest | Nature of Interest |
|---|---|---|
| in Franchisee | ||
6.
Source: Item 23 — RECEIPTS (FDD pages 71–242)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the 'Due from affiliate' entry represents the amount owed to Belocal by its affiliate, N2 Company. As of June 30, 2025, this amount was $4,217,245, and as of June 30, 2024, it was $3,998,969. This indicates that N2 Company receives credit from Belocal in the normal course of business without providing collateral.
The FDD states that N2 Company provides accounting, marketing, and other operating services to Belocal. The costs for these services are included in management fees, which totaled $6,624,000 for the year ended June 30, 2025; $6,048,000 for the year ended June 30, 2024; and $4,800,000 for the year ended June 30, 2023. Conversely, Belocal provides sales services to N2 Company, with revenues of $82,501,921 for the year ended June 30, 2025; $77,450,854 for the year ended June 30, 2024; and $77,776,240 for the year ended June 30, 2023.
The FDD also cautions that the financial results might differ significantly if these related-party transactions were conducted with unrelated third parties. This is because the terms and conditions of transactions between related parties may not be the same as those that would be negotiated between independent parties. Prospective franchisees should consider the potential impact of these related-party transactions on Belocal's financial performance and stability. Understanding the dynamics between Belocal and its affiliate, N2 Company, is crucial for assessing the overall financial health and risks associated with investing in a Belocal franchise.