What happens to intercompany transactions in XPOF Assetco, LLC's consolidated financial statements, which include Bft?

According to Bft's 2025 Franchise Disclosure Document, the consolidated financial statements of XPOF Assetco, LLC, which include Bft as a wholly-owned subsidiary, eliminate all intercompany transactions during consolidation. This means that any financial transactions between Bft and its parent company or other subsidiaries within the XPOF Assetco, LLC group are removed from the final consolidated financial statements to avoid double-counting and to present a clear picture of the overall financial position of the consolidated entity.

For a prospective Bft franchisee, this consolidation principle is important because it ensures that the financial statements accurately reflect the overall performance of XPOF Assetco, LLC without artificial inflation or distortion from internal transactions. Understanding this accounting practice helps franchisees assess the financial health and stability of the parent company, which can impact the support and resources available to them.

It's worth noting that while intercompany transactions are eliminated for the purpose of consolidated financial reporting, related party transactions do occur between XPOF Assetco, LLC and its Member, Xponential Fitness LLC. These related party transactions, such as net advances, expense allocations, and cash transfers, are disclosed in the notes to the financial statements. Franchisees should review these disclosures to understand the financial relationships between Bft's parent company and its affiliates, as these relationships could potentially affect the financial condition and operations of the franchise system.