For the Chatime franchise, what is the significance of December 31, 2024?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
In the ordinary course of business, the Company periodically advances funds to and receives funds from the Member of the Company. No interest is charged on these advances. Advances to and from the Member are noninterest bearing and have no specific date for repayment. The balance due from Member amounted to $20,108 and $300,000 at December 31, 2024 and 2023, respectively. Management expects these balances to be settled within the next year. The balance due to Member amounted to $60,015 and $- at December 31, 2024 and 2023, respectively. Management does not expect these balances to be settled within the next year.
Royalties paid to the Licensor for the year ended December 31, 2024 totaled $22,115, which is included in "Selling, general and administrative expenses" in the accompanying statements of operations and member's equity (deficit). There were no royalties paid to the Licensor in 2023.
In the ordinary course of business, the Company advances funds to and from entities affiliated to the Company by common ownership and control. Advances to and from the affiliates are unsecured and have no specific repayment terms. The amount due to the affiliates, net, at December 31, 2024 was $75,928. Such amounts are not expected to be settled within the next year and, accordingly, have been classified as noncurrent liabilities. There were no amounts due to affiliates at December 31, 2023.
As of December 31, 2024, our affiliates owned and operated three company-owned Chatime Store locations in Southern California, which opened in 2023.
This list includes franchises in the United States as well as its territories including Guam, operating as of December 31, 2024, who were issued franchise or license agreements by us, our affiliate La Kaffa, or our affiliate Chatime USA LLC, for the operation of a Chatime Outlet.
This Item 19 shows the historic Net Sales information for calendar year 2024 for the Chatime franchise locations operating within the United States of America which have been operating more than 12 months in their current location and were operating as of December 31, 2024 under agreement with Chatime Franchise LLC.
Source: Item 21 — Financial Statements (FDD page 58)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, December 31, 2024, serves as the cut-off date for much of the financial and operational data reported in the FDD. This date is used to provide a snapshot of Chatime's financial status, franchise network size, and related-party transactions at the close of the fiscal year. For example, the financial statements included in the FDD, such as the balance sheets and statements of operations, cover the periods ending on December 31, 2024, and December 31, 2023, allowing for a year-over-year comparison. The independent auditor's report also references this date, confirming the accuracy of the financial statements as of that time. Chatime also reports that as of December 31, 2024, its affiliates owned and operated three company-owned Chatime Store locations in Southern California, which opened in 2023.
Specifically, the balance due from the Member amounted to $20,108 as of December 31, 2024, compared to $300,000 the previous year. The balance due to the Member was $60,015 as of December 31, 2024, compared to zero in 2023. The amount due to affiliates, net, was $75,928 as of December 31, 2024, with no amounts due to affiliates at the end of 2023. These figures provide insight into the financial relationships between Chatime and its related parties.
Furthermore, Item 19, concerning Financial Performance Representations, uses December 31, 2024, as a key date. The item includes historic Net Sales information for calendar year 2024 for Chatime franchise locations operating within the United States of America which have been operating more than 12 months in their current location and were operating as of December 31, 2024 under agreement with Chatime Franchise LLC. This means that the financial performance data presented is based on stores that were open and operating under a franchise agreement as of this date, offering prospective franchisees an overview of sales performance for existing locations. The FDD also states that the list of franchises includes those in the United States and its territories, including Guam, operating as of December 31, 2024, who were issued franchise or license agreements by Chatime, its affiliate La Kaffa, or its affiliate Chatime USA LLC, for the operation of a Chatime Outlet.
In summary, December 31, 2024, is a crucial reference point in the 2025 Chatime FDD because it marks the end of the fiscal year for which financial and operational data are reported. This date is essential for understanding the financial health of the franchisor, the performance of existing franchise locations, and the relationships between Chatime and its related entities. A prospective franchisee should pay close attention to the figures and statements tied to this date to gain a comprehensive understanding of the Chatime franchise system.