What is the total value of liabilities reported for Extreme Art Studio?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
| 2000 Accounts Payable | 0.00 |
|---|---|
| Total Accounts Payable | $ 0.00 |
| Credit Cards | |
| Total Credit Cards | $ 0.00 |
| Other Current Liabilities | |
| 2100 Payroll Liabilities | 0.00 |
| 2408 WF Line of Credit 2314 | 0.00 |
| Total 2450 Deferred Revenue | $ 0.00 |
| Total Other Current Liabilities | $ 0.00 |
| Total Current Liabilities | $ 0.00 |
| Long-Term Liabilities | |
| 2430 Note Payable - Long Term | 15,000.00 |
| Total Long-Term Lia |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, the total liabilities reported on the balance sheet as of December 31, 2023, amount to $15,000.00. This figure is broken down into current liabilities and long-term liabilities. The current liabilities include accounts payable, credit cards, and other current liabilities, all of which are reported as $0.00. The long-term liabilities consist of a note payable amounting to $15,000.00.
For a prospective Extreme Art Studio franchisee, understanding the liabilities of the franchisor is crucial. A high level of liabilities could indicate financial strain, which might affect the franchisor's ability to support its franchisees. In this case, the liabilities consist entirely of a long-term note payable, which may or may not be a cause for concern depending on the franchisor's ability to manage this debt. It is important to investigate the terms of the note payable, such as the interest rate and repayment schedule, to assess the potential impact on the franchisor's financial stability.
In the franchise industry, it is common for franchisors to have some level of debt, especially if they are investing in growth and expansion. However, it is essential to evaluate the franchisor's financial statements carefully and compare their debt levels to those of other franchisors in the same industry. A prospective franchisee should also consider the franchisor's revenue and profitability to determine whether they have the financial capacity to meet their obligations. Consulting with a financial advisor can provide additional insights into the franchisor's financial health and help the franchisee make an informed decision.
Overall, while Extreme Art Studio's reported liabilities of $15,000 consist entirely of a long-term note payable, further investigation into the terms of this debt and the franchisor's overall financial health is warranted. This will help potential franchisees assess the financial stability of the franchisor and make an informed decision about investing in the franchise.