What is the nature of the transactions between Gokhale Method and its parent company?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
| Transactions | ||
|---|---|---|
| incurred | ||
| Gokhale Method Enterprise, Inc | Management fee | $ 26,100 |
| Transactions | Dec | ember 31, | |
|---|---|---|---|
| incurred | 2023 | ||
| Gokhale Method Enterprise, Inc | Management fee | $ | 56,200 |
| Transactions incurred | 4.752 | mber 31, 021 | De | cember 31, 2020 | |
|---|---|---|---|---|---|
| Gokhale Method Enterprise Inc | Management fee | $ | 49,300 | S | 33,797 |
NOTE 1 - NATURE OF OPERATIONS
Gokhale Method Institute, Inc. ("GMI" or the "Company") was incorporated in 2011 as a California Sub-Chapter S Corporation by Gokhale Method Enterprise, Inc. ("GME"). The subsidiary was formed to franchise the Gokhale Method of dealing with back issues.
Accounts receivable is primarily comprised of net royalty receivables from franchise, teachers, or class fees collected by GME.
The Company does not file taxes at federal level due to Qualified Sub-Chapter S Subsidiary, GMI files a consolidated return with Gokhale Method Enterprises, Inc.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, Gokhale Method Institute, Inc. (GMI) is a wholly-owned subsidiary of Gokhale Method Enterprise, Inc. (GME). GMI was formed by GME in 2011 to franchise the Gokhale Method. One notable transaction between the two entities is a management fee paid by GMI to GME.
The FDD provides specific figures for these management fees. In 2022, the management fee incurred was $26,100. This fee increased to $56,200 in 2023. For comparison, the management fees were $49,300 in 2021 and $33,797 in 2020.
Prospective franchisees should note that GME also collects class fees. Additionally, GMI files a consolidated tax return with GME due to its status as a Qualified Sub-Chapter S Subsidiary. Understanding the financial relationship between GMI and GME is crucial for assessing the overall financial health and stability of the Gokhale Method franchise system. A potential franchisee should seek clarification from Gokhale Method regarding the services covered by the management fee and how these fees are determined.