What is the significance of May 29, 2025, in relation to Cream's financial statements?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
We have not been in business for 3 years or more, and therefore cannot include all of the financial statements required by the FTC franchise rule. Attached to this Disclosure Document as Exhibit D is our audited opening balance sheet as of May 29, 2025. Our fiscal year ends on the fourth Sunday in the fiscal month of December, except when the fourth week of the fiscal month of December ends before December 31st, in which case our fiscal year is extended by one week.
May 29, 2025
Note 1 - Nature of Business
Jeni's Splendid Ice Creams Franchise, LLC (the "Company") was organized in the State of Ohio on April 16, 2025 as a limited liability company. The purpose of the company is to franchise, develop, and foster the growth and expansion of the Jeni's franchising system. The Company is a wholly owned subsidiary of Jeni's Splendid Ice Creams, LLC (the "Parent").
The Company uses the accrual basis of accounting and operates on a 52-/53-week fiscal year.
Under an Intercompany Trademark License Agreement with the Parent, the Company has a limited nonexclusive right to use the Licensed Marks in connection with its operations. As of May 29, 2025, the Company has not signed any franchise agreements.
Note 2 - Significant Accounting Policies
Basis of Presentation
The financial statement of the Company has been prepared on the basis of generally accepted accounting principles (GAAP). The preparation of a financial statement in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statement. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all investments with an original maturity of three months or less when purchased to be cash equivalents. At May 29, 2025, the Company held cash of $300,000.
The Company maintains its cash in bank deposit accounts that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risks on cash or cash equivalents.
Income Taxes
The Company is treated as a partnership for federal income tax purposes. Consequently, federal income taxes are not payable or provided for by the Company. The member is taxed on the Company's earnings. The Company's net income or loss is allocated to the member in accordance with the Company's operating agreement.
The Company had no losses recorded as of May 29, 2025.
Note 3 - Member's Equity
The Company was formed through a contribution of equity from the Parent in the amount of $300,000.
The financial statement and related disclosures include evaluation of events up through and including June 9, 2025, which is the date the financial statement was available to be issued.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 60)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, May 29, 2025, is the date of the company's audited opening balance sheet. Because Cream has not been in business for at least three years, the company is not able to include all of the financial statements typically required by the FTC franchise rule. As of May 29, 2025, Cream had cash holdings of $300,000. This cash was obtained through equity contributed by Cream's parent company.
As of May 29, 2025, Cream had not yet signed any franchise agreements. The financial statement includes the evaluation of events up to June 9, 2025, which is the date the financial statement was available to be issued.
Cream, as a partnership for federal income tax purposes, does not directly pay federal income taxes. Instead, the member is taxed on the company's earnings, with net income or loss allocated according to the company's operating agreement. The financial statement was audited by an independent auditor, who issued an opinion that the financial statement presents fairly the financial position of Cream as of May 29, 2025, in accordance with accounting principles generally accepted in the United States of America.