What was the value of the related party note receivable for Face Foundrie in 2024?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Assets | |||
| Current assets | |||
| Cash and cash equivalents | $ 3,480,620 | $ 1,969,123 | $ 1,611,868 |
| Accounts receivable, net | 424,770 | 96,311 | 101,020 |
| Prepaid expenses | 8,530 | 17,976 | - |
| Related party note receivable | 750,000 | 750,000 | 130,986 |
(h) Related Party Note Receivable
In the routine course of business, the Company loans cash to other entities related by common ownership and those entities incur costs on behalf of the Company resulting in net related party receivables. As of December 31, 2022, the net related party receivables were $130,986. As of December 31, 2023, the balance was $750,000, which the Company converted into a note receivable. The terms of the note call for quarterly payments over five years beginning March 1, 2024. The note accrues interest at a rate of 1.99% annually. As of December 31, 2024, the balance was $750,000.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 73)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, the value of the related party note receivable as of December 31, 2024, was $750,000. This note receivable originated from the conversion of net related party receivables as of December 31, 2023, also valued at $750,000, into a formal note.
The terms of this note receivable include quarterly payments over a five-year period, which commenced on March 1, 2024. Additionally, the note accrues interest at an annual rate of 1.99%. This indicates that Face Foundrie has extended a significant loan to a related party, with structured repayment terms including both principal and interest.
For a prospective franchisee, this related party transaction is important for understanding Face Foundrie's financial dealings and relationships with affiliated entities. While related-party transactions are not inherently problematic, they warrant scrutiny to ensure they are conducted at arm's length and do not disadvantage the franchise system. Franchisees may want to inquire about the nature of the related party, the purpose of the loan, and the measures in place to ensure the note is repaid according to its terms.