How much cash did Fly Fitness pay for intangible assets in 2022?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
(155,540) | | Members' equity, beginning of year | 468,165 | | Members' equity, end of year | $ 312,625 |
STATEMENT OF CASH FLOWS
| For the Year Ended December 31 | 2022 |
|---|---|
| Increases (decreases) in cash and cash equivalents | |
| Cash flows from operating activities Net income (loss) | $ (155,540) |
| Adjustments to reconcile net loss to net cash used by operating activities | 12 500 |
| Amortization | 12,500 |
| Increase in operating liabilities | 125 |
| Credit cards payable Accrued payroll | 125 3,294 |
| Net cash used by operating activities | $ (139,621) |
| Cash flows from investing activities | |
| Cash paid for intangible assets | $ (125,000) |
| Net cash used by investing activities | $ (125,000) |
| NET CHA |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 44)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the company paid $125,000 in cash for intangible assets in 2022. This payment is detailed in the cash flow statement for the year ended December 31, 2022. The intangible assets acquired through this payment relate to a licensing agreement with "Fly – A Fitness Revolution" for the use of intellectual property, including trademarks, logos, and the Fly Fitness name.
This initial payment was a lump-sum made at the inception of a 10-year licensing agreement. In addition to the initial lump sum payment, Fly Fitness is obligated to pay an additional $20,000 per year for the life of the agreement.
For a prospective franchisee, this indicates that Fly Fitness made a significant initial investment to secure the rights to its brand and intellectual property. The ongoing annual payments of $20,000 suggest a continuing cost associated with maintaining these rights. It's important to note that these financial statements have been prepared without an audit, meaning that an independent certified public accountant has not audited these figures.