What was the amount of the Short Term Loan from Endless Summer Sweets, LLC to Endless Summer Sweets?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
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Endless Summer Sweets Franchising Inc. Statement of Cash Flows From March 9 to December 31, 2023
| Net Income | $ | (15,648) |
|---|---|---|
| Net cash provided (consumed) by operating activities | (15,648) | |
| Cash flows from financing activities: | ||
| Stockholders' Contribution | 2,000 | |
| Short Term Loan-Endless Summer Sweets, LLC | 15,648 | |
| Net cash provided (consumed) by financing activities | 17,648 | |
| Net increase (decrease) in cash and e |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 38)
What This Means (2024 FDD)
According to Endless Summer Sweets' 2024 Franchise Disclosure Document, the company received a short-term loan from Endless Summer Sweets, LLC in the amount of $15,648. This loan is reflected in the Statement of Cash Flows for the period from March 9, 2023, to December 31, 2023. The loan is categorized as cash flow from financing activities.
This short-term loan contributed to the overall financing activities of Endless Summer Sweets during its initial period of operations. Along with a $2,000 contribution from stockholders, the loan helped the company achieve a net increase in cash and equivalents of $2,000 by the end of the year. Without this loan, the company's cash position would have been negative, given the net loss of $15,648 from operations.
Prospective franchisees should note that related-party transactions, such as this loan, are common in new franchise systems. It is important to understand the terms of such loans, including interest rates and repayment schedules, to assess the financial health and stability of the franchisor. While the FDD states there were no material related party transactions for the period ending December 31, 2023, the loan itself is explicitly listed in the cash flow statement, so franchisees should inquire about the nature and implications of this loan.