What was the total value of Golden Krust Caribbean Restaurant's cash and restricted cash in 2023?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
Cash and Restricted Cash*
The Company considers all highly liquid debt instruments purchased with an initial maturity of three months or less to be cash equivalents. Cash and restricted cash on the balance sheets includes $258,713 and $1,153,034 of restricted cash related to the Company's advertising fund, as of December 31, 2023 and 2022, respectively.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash and Restricted Cash (Continued)
The Company maintains an advertising fund, which is accounted for separately, as described in the Company's Franchise Disclosure Document (FDD). The Company's franchisee's make monthly contributions to the advertising fund based on a percentage of their respective sales. These funds are segregated to pay for franchise related advertising and cannot be used to defray general operating expenses of the Company, except as otherwise described in the FDD.
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's cash and restricted cash balance includes $258,713 of restricted cash related to the company's advertising fund as of December 31, 2023. This indicates that Golden Krust Caribbean Restaurant earmarks a portion of its cash holdings specifically for advertising purposes. These funds are kept separate from general operating funds.
These restricted funds come from monthly contributions made by Golden Krust Caribbean Restaurant franchisees, calculated as a percentage of their sales. The purpose of this advertising fund is to cover franchise-related advertising expenses. According to the FDD, these funds cannot be used for the company's general operational costs, except as explicitly outlined in the document.
Furthermore, the FDD states that Golden Krust Caribbean Restaurant had no accrued advertising expenses as of December 31, 2023. This is because the company spent more on advertising than it received in advertising revenue from its franchisees. This could mean that Golden Krust Caribbean Restaurant is investing heavily in advertising to support its franchisees, potentially benefiting their businesses.