What was the retained earnings (deficit) balance for Engineering For Kids as of January 1, 2022?
Engineering_For_Kids Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|
| REVENUE | ||||||
| Royalty fees | $ 235,010 | $ | 264,890 | $ | 233,947 | |
| Brand fees | 44,888 | 52,752 | 49,183 | |||
| Technology fees | 38,300 | 37,500 | 42,200 | |||
| Franchise fees | 90,250 | 34,000 | 51,500 | |||
| Late fees | 10,114 | 2,875 | 1,925 | |||
| TOTAL REVENUE | 418,562 | 392,017 | 378,755 | |||
| OPERATING EXPENSES | ||||||
| Royalty and overhead | 83,700 | 78,400 | 36,000 | |||
| Salaries and wages | 87,156 | 69,961 | 64,974 | |||
| Marketing and advertising | 15,397 | 53,981 | 72,488 | |||
| Franchisor marketing expense | 51,070 | 46,511 | 33,266 | |||
| Office | 44,342 | 32,211 | 21,614 | |||
| Consulting fees | 21,426 | 29,607 | 29,870 | |||
| Professional and legal fees | 51,589 | 20,265 | 40,483 | |||
| Travel | 9,801 | 12,349 | 6,622 | |||
| Credit loss expense | 1,740 | 6,953 | 10,739 | |||
| Bank charges | 4,685 | 2,405 | 2,037 | |||
| Amortization | 10,437 | - | 2,235 | |||
| TOTAL OPERATING EXPENSES | 381,343 | 352,643 | 320,328 | |||
| Income from operations | 37,219 | 39,374 | 58,427 | |||
| OTHER INCOME | ||||||
| Foreign exchange gain (loss) | - | (4,441) | (2,167) | |||
| NET INCOME | $ 37,219 | $ | 34,933 | $ | 56,260 |
ENGINEERING FOR KIDS INTERNATIONAL, LLC STATEMENTS OF MEMBER'S EQUITY YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022
| | Member Capital | Retained Ear
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to Engineering For Kids' 2025 Franchise Disclosure Document, the retained earnings (deficit) balance as of January 1, 2022, was a deficit of $(15,900). This figure indicates the accumulated losses of Engineering For Kids up to that point exceeded its accumulated profits.
For a prospective franchisee, a deficit in retained earnings can signal financial instability or that the company is in an early growth stage where investments outweigh profits. It's important to note that a deficit alone doesn't necessarily mean the company is failing, but it warrants further investigation.
A potential franchisee should consider this information in the context of Engineering For Kids' overall financial health, including its revenue trends, assets, and liabilities. It would be prudent to ask the franchisor about the strategies they have in place to address the deficit and ensure long-term financial sustainability. Understanding the reasons behind the deficit and the franchisor's plan to improve their financial position is crucial before investing in the franchise.