What was the amount due from related parties for Expense Reduction Analysts in 2023?
Expense_Reduction_Analysts Franchise · 2025 FDDAnswer from 2025 FDD Document
8, respectively, for these services. As of December 31, 2024 and 2023, the Company owed ASNS $3 and $264,660, respectively, for these services. The amounts are included in Due to Related Parties within the current liabilities portion of the balance sheet.
The Company provided significant technology support and development functions to affiliates in other countries and management services to a local affiliate, Southwest Cost Strategies. Management services were $676,000 and $667,500 for the years ended December 31, 2024 and 2023, respectively. The Company was owed $1,024,215 and $997,500 at December 31, 2024 and 2023, respectively, to reflect these costs, resources, and services. These services are performed in the ordinary course of business and are therefore classified as current assets. Further, the receivables are backed by the parent company in the event the related party is unable to satisfy their obligation. These amounts are included within Due from Related Parties on the balance sheet.
NOTE 9 RELATED PARTY TRANSACTIONS (CONTINUED)
The Company is billed for certain IT and Marketing support from U.K. and European affiliates. These amounts totaled $137,485 and $821,747 at December 31, 2024 and 2023, respectively. $550,000 and $821,747, respectively, were included in Due to Related Parties within the current liabilities portion of the balance sheet at December 31, 2024 and 2023.
The Company was provided with CRM development services from an affiliate in the U.K. The amounts totaled $3,391 and $3,687 at December 31, 2024 and 2023, respectively. $-0-and $3,687, respectively, were included in Due to Related Parties within the current liabilities portion of the balance sheet at December 31, 2024 and 2023.
As with its accounts receivable, the Company will periodically assess whether an allowance for current expected credit losses is needed. As of December 31, 2024 and 2023, an allowance for expected credit losses for related party accounts was not deemed necessary.
Source: Item 23 — RECEIPTS (FDD pages 58–215)
What This Means (2025 FDD)
According to Expense Reduction Analysts' 2025 Franchise Disclosure Document, the company was owed $997,500 at December 31, 2024 and $1,005,148 at December 31, 2023, from related parties. These amounts reflect costs, resources, and services that Expense Reduction Analysts provided to affiliates in other countries, as well as management services to a local affiliate, Southwest Cost Strategies. These services are part of the ordinary course of business and are classified as current assets on the balance sheet.
Additionally, Expense Reduction Analysts owed MIC a total of $430,431 at December 31, 2023 for unpaid royalties and other advances. The company also owed ASNS $264,660 at December 31, 2023, for consulting and management services. Furthermore, Expense Reduction Analysts owed $821,747 at December 31, 2023 for IT and Marketing support from U.K. and European affiliates and $3,687 at December 31, 2023 for CRM development services from an affiliate in the U.K.
For a prospective franchisee, understanding related party transactions is crucial because these transactions can impact the financial health and stability of Expense Reduction Analysts. The amounts due from related parties represent potential assets, while the amounts owed to related parties represent liabilities. Franchisees should assess whether these related party transactions are conducted at arm's length and on terms that are favorable to Expense Reduction Analysts.
It is also important to note that the receivables from related parties are backed by the parent company, which provides some assurance that Expense Reduction Analysts will be able to collect these amounts. However, franchisees should still carefully review the financial statements and related disclosures to assess the creditworthiness of the related parties and the potential risk of non-payment.