What was the amount of notes receivable from CKE Inc. for Carls as of January 31, 2022?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
rating costs and expenses | 736,564 | 740,329 | | Operating income | 95,774 | 92,204 | | Interest expense | (62,900) | (63,303) | | Other income, net | 3,751 | 4,458 | | Income before income taxes | 36,625 | 33,359 | | Income tax expense | 8,865 | 8,620 | | Net income $ | 27,760 | $ 24,739 |
CKE RESTAURANTS HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands)
| Fi | scal 2023 | Fi | scal 2022 | |
|---|---|---|---|---|
| Net income | S | 27,760 | $ | 24,739 |
| Other comprehensive loss: | ||||
| Foreign currency translation adjustments | (250) | (186) | ||
| Other comprehensive loss | (250) | (186) | ||
| Comprehensive income | S | 27,510 | $ | 24,553 |
CKE RESTAURANTS HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except shares)
| Shares | Common Stock Amount | Additional Paid-In Capital | Notes Receivable from CKE Inc. | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Equity | |||
|---|---|---|---|---|---|---|---|---|---|
| Balance as of January 31 | 100 | $ | $ 691 ,182 | $(300,366) $ (45,339) | $ | (699) $344,778 | |||
| , 2021 | |||||||||
| Share-based compensation | 855 | 855 | |||||||
| Other comprehensive income | (186) |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, as of January 31, 2022, the notes receivable from CKE Inc. was reported as a negative $441,866. This figure reflects the balance of notes that CKE Restaurants Holdings, Inc. had receivable from CKE Inc. at that time.
In 2023, CKE Inc. merged with CKE Restaurants, with CKE Restaurants surviving the merger. As a result, all assets, liabilities, and debts of CKE Inc. were transferred to CKE Restaurants. Consequently, the intercompany note agreements between the entities were cancelled, and the $441,866 note receivable was reclassified to accumulated deficit.
For a prospective Carls franchisee, this information provides insight into the financial restructuring and intercompany transactions within the parent organization. Understanding these transactions can help franchisees assess the financial stability and management practices of the franchisor. It's important to note that intercompany transactions are not uncommon in franchise systems, but their impact on the franchisor's financial health should be carefully evaluated.