What was the amount due to related party for Craters & Freighters as of December 31, 2024?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
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| As of December 31, | 2024 | 2023 |
|---|---|---|
| 18 of December 31, | 2021 | 2023 |
| Current Liabilities: | ||
| Accounts Payable | $ 1,181,960 $ | 1,061,526 |
| Accrued Wages and Other Liabilities | 32,282 | 1,790 |
| Due to Related Party | 65,000 | - |
| Operating Lease Liability - Due Within One Year | 65,249 | 76,496 |
| Total Current Liabilities | 1,344,491 | 1,139,812 |
| Long Torm Liabilities | ||
| Long Term Liabilities: Due to Shareholder | 2,769,688 | |
| Operating Lease Liability - Due After One Year | - | 67,655 |
| Total Long-Term Liabilities | - | 2,837,373 |
| Total Liabilities | 1,344,491 | 3,977,155 |
| Shareholder's Equity | ||
| Common Stock, No Par Value; 1,000,000 Shares | ||
| Authorized; 1,000,000 Shares Issued and Outstanding | 100 | 100 |
| Additional Paid-in Capital | 800 | 800 |
| Retained Earnings | 6,458,972 | 5,413,239 |
| Total Shareholder's Equity | 6,459,872 | 5,414,139 |
| TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY | $ 7,804,363 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, as of December 31, 2024, the amount due to a related party is detailed in the balance sheet under current liabilities. Specifically, $65,000 was due to a related party as of this date. In contrast, no amount was due to this related party as of December 31, 2023.
This liability signifies transactions between Craters & Freighters and a company where a board member holds a significant ownership interest. The total amount paid to this related party during the year ending December 31, 2024, was $236,500. It is important to note that management believes these services were provided in the normal course of business and conducted on an arm's length basis.
For a prospective franchisee, this indicates that Craters & Freighters engages in transactions with related parties, which is not uncommon but requires careful scrutiny. Understanding the nature of these related-party transactions and ensuring they are conducted fairly is crucial for assessing the financial health and transparency of the franchise. Franchisees should seek clarification on the types of services provided by the related party and the terms of these transactions to ensure they do not pose any conflicts of interest or financial risks.