What was the outstanding balance on the Bevaris Alliance line of credit as of December 31, 2023?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
,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
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to Bevaris Alliance's 2024 Franchise Disclosure Document, the company maintained a line of credit of $40,000 with a finance company. The interest rate on this line of credit was 59.9% per annum. During 2023, Bevaris Alliance made advances of $2,000 and payments of $1,000 on this line of credit. As of December 31, 2023, the outstanding balance on the line of credit was $1,000.
For a prospective franchisee, this indicates that Bevaris Alliance utilizes debt financing to manage its operations. The high interest rate of 59.9% suggests that the company may have limited access to lower-cost capital or that the line of credit was obtained under less favorable terms. The fact that the outstanding balance was $1,000 at the end of 2023, after advances and payments, provides a snapshot of the company's borrowing activity during the year.
It's important to note that the line of credit's availability and terms could impact Bevaris Alliance's ability to support its franchisees. A potential franchisee should consider the implications of Bevaris Alliance's debt obligations and how they might affect the franchisor's financial stability and its capacity to provide ongoing support and resources to its franchisees. Understanding the franchisor's financial health is a crucial aspect of evaluating the overall risk and opportunity associated with investing in a Bevaris Alliance franchise.