In the Gokhale Method FDD, what is the nature of the relationship being disclosed?

According to the 2024 Gokhale Method FDD, Gokhale Method Institute, Inc. (GMI) grants franchises to individuals to operate businesses that offer classes and products based on the Gokhale Method. This method focuses on restoring the body's natural posture and movement patterns. GMI, as the franchisor, licenses its trademarks and related marks to franchisees, allowing them to conduct classes within their designated franchise area. GMI was formed as a subsidiary of Gokhale Method Enterprise, Inc. (GME) to specifically handle the franchising operations.

The FDD also clarifies the relationship between GMI and its parent company, GME. GME incorporated GMI in 2011 as a California Sub-Chapter S Corporation, with the purpose of franchising the Gokhale Method. This corporate structure is typical in franchising, where a parent company establishes a subsidiary to manage the franchise operations, potentially for legal or financial reasons.

Prospective franchisees should understand that GMI's financial performance and stability could be linked to its relationship with GME. The FDD also notes that accounts receivable are primarily comprised of net royalties' receivables from franchise, teachers or class fees collected by GME. This indicates that GME may handle the collection of royalties and fees on behalf of GMI. Understanding the financial interactions between GMI and GME is crucial for assessing the overall financial health of the Gokhale Method franchise system.