Does Gold Star reflect income or expense on its consolidated financial statements from its pass-through function of advertising contributions?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
----|-----------| | 2026 | | 1,437,287 | | 2027 | | 1,449,009 | | 2028 | | 1,357,457 | | 2029 | | 1,072,712 | | Thereafter | | 2,653,133 | | | | | | | $. | 9,635,500 |
Property and Equipment related to operating lease and related accumulated depreciation was as follows:
| December 31, | |||||||
|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | |||||
| Buildings | $ | 16,002,653 | $ | 13,365,027 | $ | 13,525,406 | |
| Less Accumulated Depreciation | 7,937,500 | 7,171,838 | 7,408,212 | ||||
| Net Building Under Lease | $_ | 8,065,153 | $ | 6,193,189 | $ | 6,117,194 |
NOTE 16 - PROFIT SHARING EXPENSE
Profit sharing / 401(k) expense was $64,584, $73,246, and $65,823 for the
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, Gold Star Chili Advertising Association, Inc. is a separate legal entity that provides advertising and marketing services for franchisees. Gold Star acts as a conduit, collecting advertising contributions from franchisees and then disbursing these funds to the advertising entity.
Importantly, Gold Star's consolidated financial statements do not reflect any income or expense from this pass-through function. However, Gold Star does make contributions to the advertising entity for marketing research and product development purposes.
In 2024, 2023, and 2022, the total advertising expense reflected in Gold Star's consolidated financial statements was $886,959, $921,454, and $996,584, respectively. This means that while the direct pass-through of franchisee advertising fees doesn't impact Gold Star's reported income or expenses, their own contributions for research and development are included as advertising expenses.