Does Carbones Pizzeria lease a facility from a limited liability company owned by its stockholder?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
torical levels of taxable income, expectations, and risks associated with estimates of future taxable income, and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance.
As of October 31, 2023, the Company's returns are subject to examination by federal and state taxing authorities, generally for three years and four years, respectively, after they are filed.
3. Related Party Transactions
Due from stockholder
The Company has note receivables from its sole stockholder in the amount of $492,605 as of October 31, 2023. This balance has no set repayment terms, is due on demand, unsecured and noninterest bearing.
Operating Lease
The Company leases a facility from a limited liability company which is owned by the stockholder of the Company (See Note 5).
Notes to Consolidated Financial Statements For the Year Ended October 31, 2023
4. Note Receivable
The Company has a note receivable from a franchisee totaling $60,500 as of October 31, 2023. The note receivable bears interest at 4.5%. Monthly principal and interest payments of approximately $1,000 are scheduled to begin in March 2024.
5. Commitments and Contingencies
Legal
From time to time, the Company is party to legal actions arising out of the ordinary course of business. The Company does not believe that these legal actions will have a material adverse effect on the Company's financial position, results of operations or cash flows.
Operating Lease
The Company has a month-to-month operating lease with a related party. Rental payments are $8,000 a month. The lease also provid
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the company does lease a facility from a limited liability company owned by its stockholder. As of October 31, 2023, the company had note receivables from its sole stockholder in the amount of $492,605. The company's returns are subject to examination by federal and state taxing authorities, generally for three years and four years, respectively, after they are filed.
The lease is an operating lease. Rental payments are $8,000 a month, and Carbones Pizzeria also pays property taxes, maintenance, insurance, and other occupancy expenses for the leased premises. The total rent expense for this facility for the year ended October 31, 2023, was approximately $82,000.
This related-party transaction means that Carbones Pizzeria's financial performance is directly linked to the financial interests of its stockholder. While not inherently problematic, prospective franchisees should carefully evaluate the terms of the lease agreement to ensure they are fair and competitive compared to market rates. It is important to verify that the lease terms do not disproportionately benefit the stockholder at the expense of the company's profitability. Understanding the details of this arrangement is crucial for assessing the overall financial health and stability of Carbones Pizzeria.