What was the retained deficit earnings for Dq Treat as of December 31, 2024?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
nts of Operations and Comprehensive Income**
In thousands
| Years ended December 31 | ||||
|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||
| Revenues | ||||
| Service fees | $ 198,627 | $ 188,908 | $ 173,116 | |
| Other fees and franchise sales | 45,681 | 45,918 | 46,482 | |
| Sales of advertising kits | 9,446 | 9,751 | 13,939 | |
| Sales of company-owned restaurants | 3,633 | 3,412 | 3,146 | |
| Other | 254 | 272 | 254 | |
| Total revenues | 257,641 | 248,261 | 236,937 | |
| Costs and expenses | ||||
| Costs of other fees and franchise sales | 3,393 | 2,971 | 4,919 | |
| Cost of sales of advertising kits | 8,725 | 9,090 | 12,647 | |
| Costs of company-owned restaurants | 3,913 | 3,805 | 3,593 | |
| Selling, general, and administrative | 115,600 | 111,911 | 99,868 | |
| Total costs and expenses | 131,631 | 127,777 | 121,027 | |
| Operating income | 126,010 | 120,484 | 115,910 | |
| Net interest income | 3,137 | 3,370 | 1,249 | |
| Income before income taxes | 129,147 |
Source: Item 17 — The following paragraph is added to the end of Item 17 of the Disclosure Document: (FDD pages 70–378)
What This Means (2025 FDD)
According to Dq Treat's 2025 Franchise Disclosure Document, as of December 31, 2024, the company had retained deficit earnings of $ (68,411). This means that Dq Treat's accumulated losses and dividend payouts exceeded its accumulated profits up to that date. This figure is an important indicator of the company's overall financial health and its history of profitability. In addition to retained deficit earnings, the balance sheet also includes common stock and additional paid-in capital of $152,197 and an accumulated other comprehensive loss of $ (3,476). The total stockholder's equity as of December 31, 2024, was $80,310.
The retained deficit earnings reflect the cumulative effect of net income, other comprehensive income or loss, and dividends paid out over the years. For Dq Treat, the net income for the year ending December 31, 2024, was $97,875, while dividends of $110,000 were paid out. This pattern of dividend payments exceeding net income contributed to the retained deficit. The company's retained deficit has fluctuated over the past few years, from $ (43,989) in 2021 to $ (68,411) in 2024.
For a prospective franchisee, the retained deficit may raise concerns about the financial stability of Dq Treat. However, it is essential to consider this figure in conjunction with other financial metrics and trends. While a retained deficit indicates accumulated losses, the company's ability to generate net income and manage its dividend payouts will be crucial for improving its financial position. Franchisees should also consider the overall stockholder's equity, which provides a broader view of the company's net worth. Understanding the factors contributing to the retained deficit and the company's strategies for addressing it is vital for making an informed investment decision.