What was the change in cash resulting from changes in royalty receivables for Chicken Guy in 2022?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
MEMBER'S EQUITY CHICKEN GUY (FRANCHISOR), LLC**
| 2024 | 2023 | 2022 | |||
|---|---|---|---|---|---|
| Revenues | |||||
| Franchise Fees | $ | 394,333 | $ | 46,667 | $ 8,500 |
| Royalties | 795,451 | 490,037 | 257,456 | ||
| Total Revenues | 1,189,784 | 536,704 | 265,956 | ||
| Expenses | |||||
| General and Administrative | 337,103 | 69,024 | 208,782 | ||
| Net Income | 852,681 | 467,680 | 57,174 | ||
| Member's Equity, Beginning of Year | 592,668 | 124,988 | 67,814 | ||
| Member's Equity, End of Year | $ | 1,445,349 | $ | 592,668 | $ 124,988 |
YEARS ENDED DECEMBER 29, 2024, DECEMBER 31, 2023, AND DECEMBER 25, 2022 STATEMENTS OF CASH FLOWS CHICKEN GUY (FRANCHISOR), LLC
| 2024 2023 | 2022 | |||
|---|---|---|---|---|
| Cash Flows from Operating Activities | ||||
| Net Income | $ | 852,681 | $ 467,680 | $ 57,174 |
| Provision for Credit Losses | 20,366 | - | - | |
| Adjustments to Reconcile Net Income to Net Cash | ||||
| Provided by (Used for) Operating Activities: |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, the change in cash resulting from changes in royalty receivables in 2022 was a decrease of $12,354. This figure is part of the broader statement of cash flows, which outlines how Chicken Guy's cash position changed over the fiscal year. Royalty receivables represent the amounts due to Chicken Guy from franchisees based on their sales.
A negative change in cash from royalty receivables suggests that Chicken Guy collected less cash from royalties than it had recorded as receivables at the beginning of the year. This could be due to various factors, such as franchisees delaying payments, disputes over royalty amounts, or Chicken Guy writing off uncollectible receivables.
For a prospective franchisee, this information highlights the importance of understanding the royalty payment terms and the potential for fluctuations in Chicken Guy's cash flow. While a single year's figure doesn't necessarily indicate a trend, it's a point to consider when evaluating the financial health and stability of the franchisor. It would be prudent to inquire about the reasons behind this change and how Chicken Guy manages its royalty collections and potential credit losses.