What is the purpose of the 'Eliminating Entries' column in the City Wide financial statement?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
nancial Statements December 31, 2024, 2023, and 2022**
Note 10. Subsequent Events
Subsequent events have been evaluated through March 20, 2025, which is the date the consolidated financial statements were available to be issued.
City Wide Franchise Company, Inc. & Subsidiaries Consolidating Schedule – Balance Sheet December 31, 2024
| City Wide Franchise Company, Inc. | City Wide Franchise of Canada, Inc. | City Wide Franchise International, Inc. | Eliminating Entries | 2024 Consolidated | |
|---|---|---|---|---|---|
| ASSETS | |||||
| Current Assets | |||||
| Cash and cash equivalents | $ 23,966,250 | $ 307,078 | $ - | $ - | $ 24,273,328 |
| Accounts receivable, net of allowance | |||||
| 2024 - $158,554, 2023 - $0, 2022 - $0 | 6,233,968 | 223,313 | - | (1,067,650) | 5,389,631 |
| Notes receivable, current maturities | 97,482 | - | - | - | 97,482 |
| Deferred franchise costs, current portion | 152,894 | 6,600 | - | - | 159,494 |
| Prepaid expenses | 961,105 | - | 7,076 | - | 968,181 |
| Inventory | 16,768 | - | - | - | 16,768 |
| Total current assets | 31,428,467 | 536,991 | 7,076 | (1,067,650) | 30,904,884 |
| Property and Equipment, net | 1,390,853 | - | - | - | 1,390,853 |
| Right-of-Use Asset - Operating Leases, net | 604,257 | - | - | - | 604,257 |
| Other Assets | |||||
| Notes receivable, less current maturities | 4,133,296 | - | - | - | 4,133,296 |
| Deferred franchise costs, net of current portion | 660,544 | 51,500 | - | - | 712,044 |
| Cash surrender value of life insurance | 1,742,041 | - | - | - | 1,742,041 |
| Total other assets | 6,535,881 | 51,500 | - | - | 6,587,381 |
| Total assets | $ 39,959,458 | $ 588,491 | $ 7,076 | $ (1,067,650) | $ 39,487,375 |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |||||
| Current Liabilities | |||||
| Accounts payable | $ 16,107,270 | $ 930,438 | $ 386,397 | $ (1,067,650) | $ 16,356,455 |
| Accrued expenses | 1,525,659 | - | 8,167 | - | 1,533,826 |
| Current portion of operating lease liabilities | 188,516 | - | - | - | 188,516 |
| Deferred franchise revenue, current | 705,734 | 35,190 | - | - | 740,924 |
| Other deferred income | 715,920 | - | - | - | 715,920 |
| Total current liabilities | 19,243,099 | 965,628 | 394,564 | (1,067,650) | 19,535,641 |
| Long-term Liabilities | 976,357 | - | - | - | 976,357 |
| Operating lease liabilities, less current portion | |||||
| Deferred franchise revenue, net of current portion | 3,471,058 | 245,475 | - | - | 3,716,533 |
| Deferred compensation | 895,020 | - | - | - | 895,020 |
| Accrued expenses, long-term | 276,776 | - | - | - | 276,776 |
| Refundable advance | 422,723 | - | - | - | 422,723 |
| Total long-term liabilities | 6,041,934 | 245,475 | - | - | 6,287,409 |
| Total liabilities | 25,285,033 | 1,211,103 | 394,564 | (1,067,650) | 25,823,050 |
| Stockholders' Equity (Deficit) | |||||
| Common stock | |||||
| Class A voting, $.01 par value; 300,000 shares | |||||
| authorized, 210,000 shares issued and outstanding | 2,100 | - | - | - | 2,100 |
| Class B nonvoting, $.01 par value; 30,000,000 shares | |||||
| authorized, 21,000,000 shares issued and |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the 'Eliminating Entries' column in the consolidated balance sheet is used to remove the effects of transactions between City Wide Franchise Company, Inc. and its subsidiaries. These subsidiaries include City Wide Franchise Company of Canada, Inc., and City Wide International Franchise Company. This consolidation process is a standard accounting practice to provide a clear financial picture of the entire organization.
In practical terms, this means that any financial transactions (like payments, loans, or shared expenses) occurring internally between City Wide and its Canadian or international subsidiaries are not double-counted in the overall financial statements. For example, if City Wide Franchise Company, Inc. provides a loan to City Wide Franchise of Canada, Inc., this transaction would appear on both companies' individual balance sheets. The 'Eliminating Entries' column removes these internal transactions to present a single, unified view of the entire City Wide organization's assets, liabilities, and equity.
For a prospective franchisee, the 'Eliminating Entries' column is not directly relevant to their individual franchise operations. However, it is important to understand that City Wide's financial statements are consolidated, meaning they represent the financial performance of the entire organization, not just the parent company. Reviewing the consolidated statements, including the eliminations, helps franchisees assess the overall financial health and stability of City Wide as a franchisor. The 2024 total assets, after eliminating entries, amounted to $39,487,375, while total liabilities were $25,823,050.
It's worth noting that the 'Eliminating Entries' column can sometimes reflect complex intercompany transactions. While the FDD provides a snapshot of the consolidated financials, a prospective franchisee might consider consulting with a financial advisor to fully understand the implications of these eliminations and the overall financial structure of City Wide.