What was the value of other noncurrent assets held by Golden Krust Caribbean Restaurant in 2022?
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)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, the company had balances due from related parties through common ownership/management. These related parties mainly consist of real estate holdings that are not consolidated in the financial statements. As of December 31, 2022, $77,718 was due from these related parties.
These amounts primarily consist of interest-bearing advances for working capital, lease payments, and allocation of operating expenses. Because there are no scheduled repayment requirements, the receivable balances are classified as noncurrent assets on the balance sheets. This means that Golden Krust Caribbean Restaurant does not expect these amounts to be converted into cash within the next year.
For a prospective franchisee, this indicates that Golden Krust Caribbean Restaurant engages in transactions with related parties, and these transactions can have a material impact on the company's balance sheet. It is important to note that the real estate holdings are not consolidated in these financial statements, which could affect the overall financial picture of the company. Understanding the nature of these related party transactions and their potential impact on the company's financial health is crucial for any potential franchisee.