Does Fly To Fit exceed the amount of insurance provided on its cash deposits?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents. The Company places its cash and any cash equivalents with a limited number of high-quality financial institutions and do not exceed the amount of insurance provided on such deposits.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, the company addresses its risk concerning cash and cash equivalents in Note C, Concentrations of Risk. Fly To Fit states that its financial instruments, specifically cash and cash equivalents, are subject to credit risk. To mitigate this risk, Fly To Fit maintains its cash and cash equivalents with a limited number of high-quality financial institutions.
Importantly, Fly To Fit explicitly states that the amounts held in these financial institutions do not exceed the coverage provided by insurance on such deposits. This indicates that Fly To Fit is taking measures to protect its cash assets by ensuring they are fully insured.
For a prospective franchisee, this is a positive sign, suggesting that Fly To Fit is managing its finances responsibly and is aware of the potential risks associated with holding cash deposits. This statement provides some assurance that the company is not exposing itself to unnecessary financial risk related to its cash management practices.