Are the assets of Dryject Company used as collateral for the loan related to the 2016 ownership transfer?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Note 2 Goodwill The accounting of the purchase of 100% of the membership units in 2016 resulted in the recognition of goodwill of $1,509,159. The Company adopted ASC 350-20-35-63 which allows private companies the option of amortizing goodwill over ten years on a straight-line basis.
- Note 3 Transfer of membership In August 2016, 100% of the ownership of the LLC was transferred to a new member. The purchase was financed with a note from Wilmington Savings Fund Society (Bank), guaranteed by the SBA, for $1,547,800 and a seller financed note of $300,000. The purchase price was $1,500,000 for 100% of the ownership of the LLC
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to Dryject's 2025 Franchise Disclosure Document, the assets of DryJect Company and DryJect Inc. Acquisition Corporation were used as collateral for the loan related to the 2016 ownership transfer. Specifically, in August 2016, 100% of the ownership of the LLC was transferred to a new member. This purchase was financed through a note from WSFS Bank, guaranteed by the SBA, for $1,547,800, along with a seller-financed note of $300,000. The total purchase price included $1,500,000 for 100% ownership of the LLC and $500,000 for the assets in DryJect Inc.
The debt and associated financing costs were allocated, with 75% assigned to the Company and 25% to DryJect Inc. Acquisition Corporation. The loan itself is collateralized by the assets of both the Company and DryJect Inc. Acquisition Corporation. Additionally, the note is guaranteed by the member.
This arrangement means that if Dryject fails to meet its debt obligations, the lender has a legal claim on the assets of both Dryject Company and DryJect Inc. Acquisition Corporation. This could potentially impact the financial stability of the franchise system and the availability of resources for franchisees. Prospective franchisees should carefully consider the implications of this debt structure and collateralization when evaluating the franchise opportunity.