What was the amount due from related parties for Golden Krust Caribbean Restaurant in 2023?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
ted statements of operations, were $142,186 and $145,391 during 2023 and 2022, respectively.
During 2023 and 2022, Bakery sales to the Company-owned restaurants aggregated approximately $605,000 and $922,000, respectively.
The Company also entered into an agreement with Bakery, whereby any related party receivables or payables will accrue interest at a rate of 1% per annum on any balances between the two companies. At December 31, 2023 and 2022, there were amounts due between the two companies of $75,031 and $4,657,186, respectively. Interest on these balances, charged to interest expense in the statements of operations totaled $7,630 and $44,615 for 2023 and 2022, respectively.
In November 2023, the Company agreed to pay Bakery $5,180,961 through a promissory note. The note has a term of 84 months and will mature on October 31, 2029. For the first 36 months, the Company will pay a monthly installment of $87,35
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, at December 31, 2023, the amount due between Golden Krust Franchising, Inc. and Golden Krust Caribbean Bakery, Inc. was $75,031. These amounts stem from an agreement where any related party receivables or payables accrue interest at a rate of 1% per annum on balances between the two companies.
In November 2023, Golden Krust Franchising, Inc. also agreed to pay Golden Krust Caribbean Bakery, Inc. $5,180,961 through a promissory note. This note has an 84-month term, maturing on October 31, 2029. For the initial 36 months, Golden Krust Franchising, Inc. will make monthly installments of $87,354, inclusive of 10.5% interest. After this period, the monthly installment will be adjusted based on the remaining balance and prevailing interest rates.
For a prospective franchisee, it's important to understand these related-party transactions, as they can impact the financial health and stability of Golden Krust Caribbean Restaurant. The reliance on Golden Krust Caribbean Bakery, Inc. for food and beverage products, as well as shared administrative resources, highlights the interconnectedness of these entities. The promissory note indicates a significant financial obligation between the companies, which could affect the availability of resources for franchise support or expansion.