Are the advances made by Healthsource Chiropractic to Octalean LLC interest-bearing?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
| Cash and cash equivalents Restricted cash - National Ad Fund | $ 2024 928,457 390,531 | $ 2023 1,333,067 185,868 | $ 2022 1,286,680 32,895 |
|---|---|---|---|
| Total cash, cash equivalent, and restricted cash | $ 1,318,988 | $ 1,518,935 | $ 1,319,575 |
Amounts included in restricted cash represent those required to be accounted for separately from other funds and are to be used for advertising, promotional, marketing and related administrative expenses.
NOTE C – ACCOUNTS RECEIVABLE - TRADE:
Accounts receivable consist of amounts due the Company from the sales of chiropractic franchises, regional developer agreements, royalties, franchise termination fees, and related support services. Accounts receivable at December 31, 2024, 2023 and 2022 consist of the following:
| Franchise and regional developer sales | $ | 32,000 | $
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, the advances made to Octalean LLC are non-interest bearing. Specifically, Healthsource Chiropractic advanced $3,017 in 2024, $408 in 2023, and $0 in 2022 to Octalean LLC. The document clarifies that Octalean, LLC is indirectly 100% owned by the majority owners of HealthSource Chiropractic, LLC.
This related-party transaction is important for prospective franchisees to understand because it provides insight into how Healthsource Chiropractic manages its finances and relationships with affiliated entities. Knowing that these advances are non-interest bearing can help franchisees assess the financial stability and transparency of the franchisor.
It is common for franchisors to engage in transactions with related parties, but the terms of these transactions should be carefully scrutinized to ensure they are fair and do not disadvantage franchisees. While the advances to Octalean LLC are non-interest bearing, it's essential to consider the overall impact of such transactions on the financial health of Healthsource Chiropractic. Franchisees should seek clarification from Healthsource Chiropractic regarding the purpose and terms of these advances to ensure they align with the best interests of the franchise system.