How much cash did Golden Krust Caribbean Restaurant pay for interest 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 the 2024 Franchise Disclosure Document, Golden Krust Caribbean Restaurant's financial statements include transactions with Golden Krust Caribbean Bakery, Inc., a related party. In 2023, Golden Krust Caribbean Restaurant paid $7,630 in interest on balances between the two companies. These balances are subject to an annual interest rate of 1%.
In November 2023, Golden Krust Caribbean Restaurant also agreed to pay Golden Krust Caribbean Bakery $5,180,961 through a promissory note. This note has an 84-month term, maturing on October 31, 2029. For the first 36 months, Golden Krust Caribbean Restaurant is required to pay monthly installments of $87,354, which includes 10.5% interest. After this initial period, the monthly installment will be adjusted based on the remaining balance and prevailing interest rates.
For a prospective franchisee, these related-party transactions highlight the importance of understanding the financial relationships between Golden Krust Caribbean Restaurant and its affiliates. The interest payments and promissory note obligations could impact the financial stability and cash flow of the company, which in turn could affect the support and services available to franchisees. It is important to note that the $7,630 interest payment is specifically related to balances at 1% interest, separate from the larger promissory note at 10.5% interest.