What was the amount of Chatime's member's equity (deficit) in 2024?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| LIABILITIES AND MEMBER'S EQUITY | / (D I | EFICIT) | |
|---|---|---|---|
| Member's equity (deficit) | (416,340) | 144,725 | |
| TOTAL LIABILITIES AND MEMBER'S EQUITY (DEFICIT) | $ | 1,358,238 | $ 475,735 |
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the member's equity (deficit) at the end of 2024 was ($416,340). This represents the accumulated financial result of Chatime's operations and member contributions up to that point in time. In contrast, at the end of 2023, Chatime had a member's equity of $144,725. This indicates a significant change in the company's financial position over the course of the year.
The fact that Chatime has a member's deficit suggests that the company's liabilities and obligations exceed its assets. This could be due to a number of factors, such as operating losses, investments in growth, or debt. Note 4 in Item 23 of the FDD states that Chatime sustained continued net losses and negative cash flows from operations for 2024.
For a prospective franchisee, this information is crucial for assessing the financial health and stability of Chatime. While a member's deficit doesn't automatically disqualify a franchise, it warrants careful consideration and further investigation. It would be prudent for a potential franchisee to inquire about the reasons for the deficit, the company's plans to address it, and the potential impact on franchisees. It is also important to note that the franchisor, Chatime Global LLC, has been advised to provide financial assistance should Chatime Franchise LLC's cash flows from operations combined with its available cash balances not be sufficient to meet its working capital needs.