Where can I find information about threats to cash management for a Bevaris Alliance franchise?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
lopment Costs at December 31, 2023 and 2022 are presented as follows:
| 2023 | 2022 | |
|---|---|---|
| Deferred franchise development costs | $ 73,279 | $ 73,279 |
| Less - accumulated amortization | (20,762) | ( 6,107) |
| Deferred franchise development costs - net | $ 52,517 | $ 67,172 |
Amortization expense for 2023 and 2022 were $14,656 and $6,107, respectively.
5. CREDIT CARD PAYABLE:
The Company maintains a credit card with a credit card provider. The aggregate credit limit for this credit card is $20,000. Interest on the credit card is 25.99% per annum. The balance due at December 31, 2023 and 2022 is $5,997 and $2,924, respectively.
6. LINE OF CREDIT:
The Company maintains a line of credit in the amount of $40,000 with a finance company. Interest on the line of credit is 59.9% per annum. Line of credit activity during 2023 included advances of $2,000 and payments of $1,000. As of December 31, 2023, the outstanding balance on the line of credit was $1,000.
7.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to Bevaris Alliance's 2024 Franchise Disclosure Document, several factors could pose threats to a franchisee's cash management. The company maintains a credit card with a credit limit of $20,000, carrying an interest rate of 25.99% per annum. The balance due on this card was $5,997 as of December 31, 2023, and $2,924 as of December 31, 2022. Additionally, Bevaris Alliance has a line of credit of $40,000 with a finance company, incurring a high interest rate of 59.9% per annum. As of December 31, 2023, the outstanding balance on this line of credit was $1,000.
These credit arrangements indicate potential risks related to debt management and high-interest expenses, which could strain a franchisee's cash flow if not managed carefully. The FDD also mentions a 2% system marketing fund fee charged to franchisees, which is used for advertising and marketing programs. The balance in this fund was $174,327 as of December 31, 2023, and $72,220 as of December 31, 2022. While this fund supports marketing efforts, franchisees need to be aware of this ongoing expense and its impact on their cash management.
Furthermore, the FDD notes that Bevaris Alliance shares office space with Bevaris Alliance, Inc. (BAI), and BAI has paid legal and professional fees on behalf of the company. There are also management fees charged by the company's member, amounting to $486,000 in 2023 and $96,000 in 2022. These related-party transactions and expense allocations could influence the financial stability and cash management of the franchise system, requiring franchisees to understand these relationships and their potential effects. Prospective franchisees should carefully evaluate these financial obligations and related-party transactions to assess their potential impact on their franchise's financial health.