What was the total amount Best Brains spent on interest expense as of December 31, 2024?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
IES AND STOCKHOLDERS' EQUITY | 4,336,162 | | Current Liabilities | | | | Account and credit card payable | 4,116,083 | 3,545,720 | | Mortgages, notes, bonds payable within 1 year | 157,834 | 50,129 | | Deferred franchise revenue - Current | 111,920 | 45,025 | | Other current liabilities | 157,392 | 170,701 | | Total Liabilities | 4,543,229 | 3,811,576 | | Non-Current Liabilities | | | | Mortgages, notes, bonds payable in 1 year or more | 300,090 | 94,311 | | Economic injury disaster loan (EIDL) | 150,000 | 150,000 | | Deferred franchise revenue - Non-current | 402,161 | 91,143 | | Total Non-current Liabilities | 852,251 | 335,454 | | Stockholders' Equity | | | | Common stock | 1,000 | 1,000 | | Additional paid in capital | 121,375 | 121,375 | | Retained earnings | 77,883 | 66,758 | | Total Stockholders' Equity | 200,258 | 189,133 | | Total Liabilities And Stockholders' Equity | $ 5,595,738 | $ 4,336,162 | | | | |
STATEMENT OF OPERATIONS Years Ended December 31, 2024, and 2023
| December 31, 2024 | December 31, 2023 | |
|---|---|---|
| Revenue | ||
| Franchise fees | $ 77,987 | $ 75,983 |
| Royalty Income | 4,075,600 | 3,502,324 |
| Tuition fees | 1,101,650 | - |
| Material charges | 2,824,687 | 1,974,379 |
| Other operating income | 653,611 | 582,654 |
| Gross Income | 8,733,534 | 6,135,341 |
| Expenses | ||
| Software expense | 1,107,354 | 893,316 |
| Payroll expense | 1,364,838 | 1,124,746 |
| Tuition Fee Reimbursement | 1,103,757 | - |
| Material development charges | 895,686 | 892,640 |
| Contractor's payment | 842,453 | 317,037 |
| Bad debt | 464,041 | - |
| Advertising and marketing | 441,906 | 311,486 |
| Supplies | 381,648 | 283,847 |
| Rent | 275,834 | 286,147 |
| Legal and professional fees | 271,716 | 222,915 |
| Office expense | 248,265 | 205,009 |
| Travel | 157,219 | 203,700 |
| Outside services | 147,209 | 768,500 |
| Insurance | 140,216 | 120,390 |
| Interest expense | 137,921 | 14,001 |
| Payroll taxes | 104,997 | 85,900 |
| Depreciation | 77,662 | 54,176 |
| Shipping and customs | 74,549 | 76,848 |
| Dues and subscriptions | 58,659 | 40,966 |
| Repairs and maintainence | 54,803 | 42,157 |
| Postage | 50,279 | 36,227 |
| Meals and entertainment | 47,496 | 70,512 |
| Commission expense | 29,473 | 22,111 |
| Taxes and license | 9,998 | 55,798 |
| Bank and merchant processing fees | 29,268 | 31,986 |
| Utilities | 25,095 | 13,583 |
| 24,194 | (1,440) | |
| Event expense | ||
| Automobile expense | 11,551 | - |
| Telephone | 7,010 | 5,785 |
| Licenses and permits | 6,056 | 262 |
| Contribution | 1,213 | 4,351 |
| Total Expenses | 8,592,366 | 6,182,958 |
| Income From Operation | 141,168 | (47,617) |
| Other Income (expense) | ||
| Gain/Loss on sale of asset, net | (1,543) | 42,812 |
| Interest Income | - | - |
| Total Other Income (expense) | (1,543) | 42,812 |
| Income Before Income Tax |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, the company's interest expense for the year ending December 31, 2024, was $137,921. This figure reflects the cost Best Brains incurred for borrowing money, which could include interest on loans, lines of credit, or other forms of debt financing. For a prospective franchisee, understanding the franchisor's interest expenses can provide insight into the company's financial leverage and debt management practices.
Interest expense is a normal part of doing business, especially for companies that are expanding or have taken on debt to finance operations. However, a significant increase in interest expense from one year to the next, as seen with Best Brains' increase from $14,001 in 2023 to $137,921 in 2024, could indicate increased borrowing or less favorable loan terms. Franchisees should consider this in the context of Best Brains' overall financial health and growth strategy.
It's important to note that while this figure provides a snapshot of Best Brains' interest obligations, it doesn't detail the specific loans or credit agreements underlying these expenses. A prospective franchisee might want to inquire about the nature of these debts, their terms, and how they are being managed. Understanding the franchisor's debt obligations can help a franchisee assess the financial stability and potential risks associated with investing in the franchise system.
In addition to the total interest expense, the FDD also provides details on a specific Economic Injury Disaster Loan (EIDL) from the Small Business Administration (SBA). Best Brains obtained a $150,000 loan in 2020 with a 3.75% interest rate to alleviate economic injury caused by the Covid-19 virus. In 2024, Best Brains paid $8,772 in interest on this loan, with no principal repayments made during the year. This information gives further insight into the types of financing Best Brains utilizes and how they manage specific debt obligations.