What was the income from discontinued OSP operations, net, for Cost Cutters Family Hair Salon?
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
s located mainly in strip center locations and Walmart. Company-owned salons offer high quality, convenient and value priced hair care and beauty services and retail products. SmartStyle, Supercuts, Cost Cutters and other regional trade names operating in the U.S. and Canada are generally within the Company-owned salons segment.
| Revenues: | | | |---|---|---| | Royalties | $ 16,528 | $ 17,180 | | Fees | 2,631 | 2,553 | | Product sales to franchisees | 384 | 443 | | Advertising fund contributions | 7,226 | 8,251 | | Franchise rental income (Note 8) | 24,667 | 30,330 | | Company-owned salon revenue | 1,936 | 3,114 | | Total revenue | 53,372 | 61,871 | | Operating expenses: | | | | Cost of product sales to franchisees | 359 | 470 | | General and administrative | 10,729 | 14,361 | | Rent (Note 8) | 1,097 | 1,753 | | Advertising fund expense | 7,226 | 8,251 | | Franchise rent expense | 24,667 | 30,330 | | Company-owned salon expense (1) | 1,490 | 2,985 | | Depreciation and amortization | 370 | 1,251 | | Total operating expenses | 45,938 | 59,401 | | | | | | Operating income | 7,434 | 2,470 | | | | | | Other expense: | | | | Interest expense | (6,188) | (3,817) | | Other, net | (200) | (463) | | | | | | Income (loss) from operations before income taxes | 1,046 | (1,810) | | | | | | Income tax benefit (expense) | 148 | (28) | | | | | | Income (loss) from continuing operations | 1,194 | (1,838) | | | | | | Income from discontinued operations (Note 3) | — | 3,306 | | | | | | Net income | $ 1,194 | $ 1,468 | | | | | | Net income per share: | | | | Basic: | | | | Income(loss)fromcontinuingoperations | 003 | (004) | | Incomefromdiscontinuedoperations | 000 | 007 | | Netincomepershare basic (2) | $ 0.03 | $ 0.03 | | Diluted: | | | | Income(loss)fromcontinuingoperations | 003 | (004) | | Incomefromdiscontinuedoperations | 000 | 007 | | Netincomepershare diluted(2) | $ 0.03 | $ 0.03 | | | | | | Weighted average common and common equivalent shares outstanding: | | | | Basic | 46,640 | 46,054 | | Diluted | 47243 | 46054 | 7RWDOUHYHQXHVDQGSURSHUW\DQGHTXLSPHQWQHWDVVRFLDWHGZLWKEXVLQHVVRSHUDWLRQVLQWKH86DQGDOORWKHU FRXQWULHVLQDJJUHJDWHZHUHDVIROORZV
| Net income | $ 1,194 | $ 1,468 | |---|---|---| | Foreign currency translation adjustments | (289) | (858) | | Comprehensive income | $ 905 | $ 610 |
UNAUDITED FINANCIAL STATEMENTS
THESE FINANCIAL STATEMENTS HAVE BEEN PREPARED WITHOUT AN AUDIT.
Source: Item 23 — RECEIPT (FDD pages 76–439)
What This Means (2024 FDD)
According to Cost Cutters Family Hair Salon's 2024 Franchise Disclosure Document, the income from discontinued operations, specifically related to the Opensalon® Pro (OSP) solution, was $3,306 for the fiscal year 2023. This income is net of any related expenses or taxes, providing a clear picture of the financial impact of the discontinued operations.
The sale of the Opensalon® Pro (OSP) solution to Soham Inc. occurred on June 30, 2022. Cost Cutters Family Hair Salon received $13.0 million in proceeds in June 2022 and an additional $5.0 million in fiscal year 2023, offset by a $0.5 million transaction fee. This transaction led to the OSP business being classified as discontinued operations in the financial statements for all presented periods.
For a prospective franchisee, this information provides insight into Cost Cutters Family Hair Salon's strategic decisions regarding its business segments. The discontinuation of the OSP business and the resulting income may reflect a strategic shift or realignment of resources within the company. While this discontinued operation does not directly impact the operation of a franchised Cost Cutters Family Hair Salon, it does provide insight into the financial management and strategic decision-making of the franchisor.