What amount was paid in interest by Golden Krust Caribbean Restaurant in 2022?
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 amo
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, the company paid $44,615 in interest related to balances with Golden Krust Caribbean Bakery, Inc. in 2022. The interest stemmed from an agreement where any related party receivables or payables between the two companies would accrue interest at a rate of 1% per annum.
This detail is important for prospective franchisees as it highlights the financial relationship between Golden Krust Franchising, Inc. and its affiliated bakery. Such related-party transactions are common in franchising, but it's crucial to understand their terms and potential impact. In this case, the 1% interest rate on inter-company balances appears relatively modest.
However, the magnitude of the balances between the companies can fluctuate significantly, as evidenced by the $4,657,186 due between the companies at the end of 2022. Franchisees should be aware that these inter-company financial arrangements could indirectly affect the financial health and stability of Golden Krust Caribbean Restaurant. Understanding these relationships can help a franchisee assess the overall financial risk and potential benefits associated with investing in a Golden Krust Caribbean Restaurant franchise.