What is the current portion of the note payable that Golden Krust Caribbean Restaurant owes?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
, which includes 10.5% interest. After 36 months, the monthly installment will be adjusted based on the remaining balance of the note based on prevailing rates. The note payable to the related party will be due as follows:
| Year Ending December 31, | Operating |
|---|---|
| 2024 | $ 538,544 |
| 2025 | 597,894 |
| 20 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to the 2024 FDD, Golden Krust Caribbean Restaurant has a note payable, and the current portion due within the next year is $538,544. The total note payable amounts to $5,096,551. After subtracting the current portion, the remaining balance of the note payable, net of the current portion, is $4,558,007. This note payable is with a related party.
For a prospective Golden Krust Caribbean Restaurant franchisee, understanding the franchisor's debt obligations is crucial. The current portion of a note payable represents the amount the company must pay within the next 12 months. A high current portion relative to the total debt could indicate potential short-term financial strain on the franchisor.
It is important to note that this note payable is to a related party, Golden Krust Caribbean Bakery, Inc. Such related-party transactions require careful scrutiny to ensure they are conducted at arm's length and do not unduly benefit or burden either entity. Franchisees should consider the implications of these related-party transactions on the financial stability and operational practices of Golden Krust Caribbean Restaurant.