Are the advances from related parties to Hyper Kidz collateralized?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
bt are as follows:
| 2024 | $ - | |--------------------------|--------------| | 2025 | - | | 2026 | - | | 2027 | 176 | | 2028 | 1,953 | | Thereafter | 76,871 $ 79,000 |
NOTE 4 – RELATED PARTY TRANSACTIONS
Advances are not collateralized, noninterest bearing and due on demand. Advances, net due from the related parties as of December 31, 2023, and 2022 were $163,052, and $176,919, respectively
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, advances from related parties are not collateralized. These advances are also noninterest bearing and are due on demand. As of December 31, 2023, the net advances due from related parties amounted to $163,052, while the corresponding amount as of December 31, 2022, was $176,919.
These advances are reported as a component of members' deficit in the accompanying balance sheets. This is because the advances do not have stated repayment terms, and the ownership of these related parties is essentially the same as the ownership of Hyper Kidz.
For a prospective franchisee, this information provides insight into the financial relationships between Hyper Kidz and its related parties. The fact that these advances are not collateralized and are due on demand suggests a degree of financial flexibility for Hyper Kidz, but it also implies a potential risk if these advances were to be called in unexpectedly. The franchisee should consider the implications of these related-party transactions when assessing the overall financial health and stability of Hyper Kidz.