What was the net amount due from related parties for Hyper Kidz as of December 31, 2022?
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, the net amount due from related parties as of December 31, 2022, was $176,919. These advances are non-collateralized, non-interest bearing, and due on demand. They are reported as a component of members' deficit in the balance sheets because they lack stated repayment terms, and the ownership of these related parties is essentially the same as the ownership of Hyper Kidz.
For a prospective Hyper Kidz franchisee, this related party transaction information is crucial for assessing the financial health and stability of the company. Understanding the nature of these advances—that they are due on demand and non-interest bearing—provides insight into the company's financial management practices and its relationships with affiliated entities.
The fact that these advances are treated as part of the members' deficit indicates that they are considered long-term investments rather than short-term liabilities. However, the 'due on demand' clause introduces a potential risk, as a sudden call for repayment could impact the company's liquidity. A prospective franchisee should seek clarification from Hyper Kidz regarding the historical context and potential implications of these related party transactions to fully understand their impact on the franchise's financial operations.