What was the change in other noncurrent assets for Golden Krust Caribbean Restaurant in 2021?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
At December 31, 2022 and 2021 there were amounts due between the two companies of $4,657,186 and $3,691,201, respectively. Interest on these balances, charged to interest expense in the statements of operations totaled $44,614 and $40,375 for 2022 and 2021, respectively.
The Company also has balances due from (to) related parties, through common ownership/management. These related parties consist mainly of real estate holdings that are not consolidated in these financial statements. A total of $913,125 and $274,191 are due to, and $77,718 and $78,040 are due from these related parties as of December 31, 2022 and 2021, respectively. These amounts primarily consist of interest-bearing advances for working capital, lease pay
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, Golden Krust Caribbean Restaurant's financial statements include information about balances due from related parties, which are classified as noncurrent assets if there are no scheduled repayment requirements. Specifically, $77,718 was due from related parties as of December 31, 2022, and $78,040 was due from related parties as of December 31, 2021. These amounts primarily consist of interest-bearing advances for working capital, lease payments, and allocation of operating expenses.
Since the balances due from related parties are classified as noncurrent assets, a potential franchisee should understand the nature of these related party transactions. It is important to note that these assets are related to real estate holdings not consolidated in the financial statements. The decrease in the amount due from related parties from $78,040 in 2021 to $77,718 in 2022 indicates a slight reduction in the funds owed to Golden Krust Caribbean Restaurant by these related entities.
For a prospective franchisee, this information highlights the importance of related-party transactions within the Golden Krust Caribbean Restaurant business model. While the amounts are relatively small, understanding the nature of these transactions and their potential impact on the company's financial position is crucial. Further due diligence into these related-party relationships and their terms would be advisable to assess any potential risks or benefits.