What was the reported amount of Exit's retained earnings in 2022?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
s payable Less: current portion Non-current portion 41,553 1,592,382 (149,748) $ 1,442,634 41,553 1,696,522 (87,060) $ 1,609,462 41,553 2,719,271 (326,323) $ 2,392,948
Upper Midwest Realty, Inc. d.b.a. Exit Realty Upper Midwest 20 Notes to Financial Statements (continued) December 31, 2024, 2023, and 2022
NOTE 3 – NOTES PAYABLE (continued)
Future maturities of notes payable are as follows:
| For the Years Ending December 31 | Amount |
|---|---|
| 2025 | $ 149,748 |
| 2026 | 143,672 |
| 2027 | 148,082 |
| 2028 | 163,446 |
| 2029 | 190,422 |
| Thereafte |
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the company had an accumulated stockholders' deficit of $758,031 as of December 31, 2022. This figure reflects the company's accumulated losses and negative working capital at that time. It's important to note that this is a deficit, not retained earnings, indicating that the company's liabilities exceeded its assets.
For a prospective franchisee, this information is crucial for assessing the financial stability of Exit. While the deficit figure alone might seem alarming, the FDD emphasizes the importance of considering broader market conditions, strategic initiatives, and operational challenges faced during that period. The document suggests that the deficit should be viewed in the context of the company's operational performance and financial health when adjusted for earnings before interest, taxes, depreciation, and amortization (EBITDA).
It is common for companies, especially during growth phases or challenging economic times, to report accumulated deficits. However, potential franchisees should carefully evaluate the factors contributing to this deficit and Exit's plans to address it. Understanding the underlying reasons for the deficit and the company's strategies for improvement is essential for making an informed investment decision. Prospective franchisees should discuss these figures with Exit to gain a clearer understanding of the company's financial position and future prospects.