What was the amount due from related parties for Expense Reduction Analysts in 2024?
Expense_Reduction_Analysts Franchise · 2025 FDDAnswer from 2025 FDD Document
gher than what would be expected if the federal statutory rate were applied to income before income taxes primarily because of certain expenses deductible for financial reporting purposes that are not tax deductible.
NOTE 9 RELATED PARTY TRANSACTIONS
During 2006, the Company received a loan from ERA International MIC (which was subsequently acquired by MIC) totaling $734,000. The note bore interest at 1.75% per annum and contained no fixed repayment terms, and the loan was repaid during 2008. The Company owes MIC a total of $101,078 for accrued interest payable at December 31, 2024 and 2023 on this loan. The Company also owes MIC a total of $136,451 and $430,431 at both December 31, 2024 and 2023, respectively, for unpaid royalties and other advances. These amounts are included in Payable to Related Party within the long-term liabilities portion of the balance sheet.
MIC provides consulting and management services to the Company through a wholly owned subsidiary, Associates Support & Network Services Ltd. (ASNS), a UK registered associate company. During 2024 and 2023, the Company expensed a total of 276,701 and 264,558, 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.
Source: Item 23 — RECEIPTS (FDD pages 58–215)
What This Means (2025 FDD)
According to Expense Reduction Analysts' 2025 Franchise Disclosure Document, the company had several transactions with related parties. In 2024, Expense Reduction Analysts was owed $1,024,215 from affiliates for technology support, development functions, and management services. These services are classified as current assets and are backed by the parent company.
Expense Reduction Analysts also had other related party transactions that resulted in amounts due to related parties. The company owed MIC $101,078 for accrued interest and $136,451 for unpaid royalties and other advances. Additionally, Expense Reduction Analysts owed ASNS $3 for consulting and management services. The company was billed $137,485 for IT and Marketing support from U.K. and European affiliates and $3,391 for CRM development services from an affiliate in the U.K.
These figures provide a snapshot of the financial interactions between Expense Reduction Analysts and its related entities, reflecting the ongoing operational and financial relationships within the broader corporate structure. A prospective franchisee should carefully review these related party transactions to understand the potential impact on Expense Reduction Analysts' financial performance and stability. Understanding these relationships can help a franchisee assess the overall financial health and operational dependencies of the company.