For Bens Soft Pretzels, what was the related party receivables balance on January 1, 2022?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
esponding contract liability for amounts not yet earned.
Contract balances as of the years ended December 31, 2024, 2023, and 2022, are as follows:
| J | anuary 1, | De | cember 31, | De | cember 31, | Dec | cember 31, | |
|---|---|---|---|---|---|---|---|---|
| Contract Balances | 2022 | 2022 | 2023 | 2024 | ||||
| Accounts receivable | $ | 58,462 | $ | 125,116 | $ | 116,811 | $ | 255,151 |
| Franchise fees receivable - current | 6,000 | 40,000 | 21,000 | 15,000 | ||||
| Related party receivables | 1,807 | 2,807 | 2,975 | 5,259 | ||||
| Deferred revenue |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 FDD, Bens Soft Pretzels' related party receivables balance on January 1, 2022, was $1,807. This figure represents the amount due to Bens Soft Pretzels from entities related to the company through common ownership at the beginning of the 2022 fiscal year. Related party receivables can include royalties, ad fund fees, gift card receivables, and balances due for expenses paid by Bens Soft Pretzels on behalf of related entities.
For a prospective franchisee, understanding the nature and magnitude of related party transactions is crucial. It provides insight into the financial relationships between Bens Soft Pretzels and its affiliated entities. A high balance of related party receivables might suggest a reliance on these entities, which could pose a risk if those entities face financial difficulties. Conversely, a low balance, as seen here, might indicate a more arm's-length relationship.
It is important to note that the balance of $1,807 reflects the receivables at the very beginning of the year. Throughout 2022, Bens Soft Pretzels engaged in several transactions with related parties, including advancing funds to entities like Dunder Holdings, Live Large Distribution, the Lafayette Group, BSP Mobile, and BSP LLC for various purposes such as building purchases, repairs, inventory, and lease settlements. These transactions significantly impacted the related party receivables balance by the end of 2022, which was $2,807.
Therefore, while the January 1, 2022 balance provides a starting point, a franchisee should also consider the overall trend and nature of related party transactions throughout the year to gain a comprehensive understanding of their potential impact on Bens Soft Pretzels' financial health. Further investigation into the details of these related party transactions and their terms would be a prudent step for any potential franchisee.