What were the repayments on notes receivable from a related party for Crave Cookies in 2022?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
of Cash Flows
Year Ended December 31, 2022 and Period from February 15, 2021 (Inception) through December 31, 2021
| 2022 | 2021 | |||
|---|---|---|---|---|
| Operating Activities | 107 | 720 | ||
| Net loss | S | (84,420) | $ | (14,725) |
| Items not requiring (providing) cash | 100 | |||
| Depreciation | 4,584 | 400 | ||
| Non-cash operating lease expense | 8,042 | - | ||
| Changes in | ||||
| Accounts receivable | (17,607) | 50 m | ||
| Inventory | 14,319 | (21,515) | ||
| Prepaid expenses | (33,205) | |||
| Contract assets | 44,595 | (44,595) | ||
| Accounts payable and accrued expenses | 32,788 | 17,176 | ||
| Lease liability | (7,719) | 7 | ||
| Contract liabilities | - | 324,252 | 8 | 330,419 |
| Net cash provided by operating activities | 285,629 | 10 | 267,160 | |
| Investing Activities | ||||
| Purchase of property and equipment | (16,064) | (7,208) | ||
| Repayments on notes receivable - related party | 170,400 | |||
| Borrowings on notes receivable - related party | - | (114,471) | _ | (62,899) |
| Net cash provided by (used in) investing activities | _ | 39,865 | 8 | (70,107) |
| Financing Activities | ||||
| Owners distributions | _ | (178,454) | ): | (162,876) |
| Net cash used in financing activities | 3 | (178,454) | (162,876) | |
| Change in Cash | 147,040 | 34,177 | ||
| Cash, Beginning of Period | 2 | 34,177 | 70 | |
| Cash, End of Period | s | 181,217 | s | 34,177 |
| Non-cash Supplemental |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies's 2025 Franchise Disclosure Document, the repayments on notes receivable from a related party during 2022 amounted to $170,400. These notes receivable represent funds due to Crave Cookies from a related party for operating expenses and other fees that Crave Cookies paid on behalf of the related party. The terms of these notes are non-interest bearing and due on demand, with the related party being wholly owned by the owners of Crave Cookies.
For a prospective franchisee, this indicates the financial transactions between Crave Cookies and its related entities. It's important to note that these transactions are with parties closely related to the company's ownership, which could present both opportunities and potential conflicts of interest. Understanding the nature and purpose of these related-party transactions is crucial for assessing the overall financial health and stability of Crave Cookies.
Franchisees should consider the implications of these financial arrangements and how they might affect the franchisor's ability to support the franchise system. While related-party transactions are not inherently problematic, they require careful scrutiny to ensure they are conducted at arm's length and do not disadvantage the franchisor or its franchisees. It would be prudent for potential franchisees to seek clarification from Crave Cookies regarding the rationale behind these transactions and the safeguards in place to prevent any adverse impact on the franchise network.
In the franchise industry, related-party transactions are relatively common, but transparency is key. Franchisees need to be aware of these dealings to make informed decisions about their investment. By understanding the financial relationships between Crave Cookies and its affiliates, prospective franchisees can better evaluate the risks and rewards associated with investing in the franchise.