Besides franchise fees and royalties, what other revenue streams does Gold Star Chili have?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
| | | Years Ended December 31, | | |---|---|---|---| | | 2024 2023 | (Restated) | | | Cash Flows From Operating Activities | | | | | Net Income | | $ 2,498,270 $ 1,595,317 | $ 1,936,301 | | Reconciliation of Net Income with | | | | | Cash Flows From Operations | | | | | Depreciation | 1,249,072 930,216 | 807,295 | | | Amortization | 63,323 | 70,168 69,297 | | | Amortization on Loan Cost | 1 3,492 4 1,695 | 1 2,973 | | | Loss on Disposal of Property and Equipment | | - 4 4,694 | 5,367 | | Gain on Early Termination of Lease | | - (26,298) | - | | Changes In | | | | | Accounts Receivable, Net | 206,833 292,502 | 524,429 | | | Other Receivables | (589) 229,976 | (67,494) | | | Inventory | 4 83,139 (354,258) | (479,542) | | | Prepaid Expenses | 272,464 227,946 | (269,624) | | | Contract Assets | | - 3 6,849 | 1 14,057 | | Deposits | 1 43,766 1 0,156 | (239,834) | | | Right of Use Asset - Operating Leases | 9 75,114 8 81,258 | 6 10,647 | | | Operating Lease Liabilities | (790,746) (765,735) | (517,628) | | | Bank Overdraft | | - (432,410) | 4 32,410 | | Accounts Payable Operating | (755,131) 1,041,601 | (409,194) | | | Gift Card Liability | 6,158 2,909 | 6,744 | | | Deferred Franchise Fees | (17,826) (26,558) | (14,609) | | | Accrued Wages and Other Liabilities | 2 61,526 2 6,786 | (3,854) | | | Accrued Expenses and Other Liabilities | (205,784) 4 0,485 | (125,691) | | | | Cash Provided by Operating Activities | 4 ,403,081 3,867,299 | 2,392,050 | | Cash Flows From Investing Activities | | | | | Payments on Notes Receivable | | - 1 2,621 | 3 2,227 | | Acquisition of Goodwill | | - (200,000) | (89,300) | | Acquisition of Intangible Assets | | - (94,447) | - | | Proceeds From Disposal of Property and Equipment | | - 485,000 | - | | Acquisition of Property and Equipment | (1,465,572) (4,640,206) | (1,336,338) | | | | Cash Used by Investing Activities | (1,465,572) (4,437,032) | (1,393,411) | | Cash Flows From Financing Activities | | | | | Change in Line of Credit | (92,581) 1 12,437 | 1,681,630 | | | Proceeds From Installment Note Payable | | - 1,833,832 | - | | Payments on Installment Note Payable | (658,333) (632,321) | (853,334) | | | Distributions | (1,814,281) (1,384,625) | (1,658,407) | | | | Cash Used by Financing Activities | (2,565,195) (70,677) | (830,111) | | | Net Change in Cash | 3 72,314 (640,410) | 1 68,528 | | Beginning Cash Balance | 1,218,648 1,859,058 | 1,690,530 | | | | Ending Cash Balance | $ 1 ,590,962 $ 1 ,218,648 | $ 1 ,859,058 |
GOLD STAR CHILI, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Principles of Consolidation
The consolidated financial statements of Gold Star Chili, Inc. (the Company) include its subsidiary, TCWW, LLC, and its consolidated entity, GSC Properties, LLC, a variable interest entity for which the Company owns no equity.
Gold Star Chili, Inc. is primarily engaged in the production and distribution of chili and related products to franchisees and Company owned chili restaurants. The Company has 9 Company stores and 48 franchise locations as of December 31, 2024. The Company also sells chili products through grocery stores. In addition, revenue is derived from franchisees in the form of initial franchise fees and royalty fees. Credit is extended to franchisees and grocery stores based on established credit policies. The Company's principal markets are Greater Cincinnati, Dayton, Ohio and Lexington, Kentucky. The Company's viability is dependent on the ability to sell additional franchises, success of stores to generate sales and the Company's ability to collect its revenue from franchisees.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, in addition to initial franchise fees and royalties, Gold Star Chili generates revenue through several other avenues. The company produces and distributes chili and related proprietary products to both its franchisees and company-owned restaurants. Gold Star also sells chili products through grocery stores. Furthermore, franchisees are required to purchase proprietary chili from Gold Star, creating a consistent revenue stream.
Gold Star Chili also owns TCWW, LLC which franchises Tom + Chee restaurants. Revenue is derived from store sales, initial franchise fees, royalties, and advertising fees from franchisees. Additionally, GSC Properties, LLC, a consolidated entity, generates revenue by renting real estate to the company, its franchisees, and third parties.
Another revenue stream is derived from a revenue-sharing agreement for a Tom + Chee restaurant located at Kings Island. Under this agreement, Gold Star is responsible for staffing and operating the location, while Kings Island provides the location. The gross sales are then split 50/50 between both parties.
For a prospective franchisee, this indicates that Gold Star Chili has diversified revenue streams beyond just franchising, which could contribute to the overall stability and financial health of the company. The requirement for franchisees to purchase proprietary chili ensures a consistent demand for Gold Star's products, benefiting the company's production and distribution operations.