What was the total members' deficit for Hyper Kidz in 2022?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
ings, and certain internal control—related matters that we identified during the audit.
Ft. Collins, Colorado March 23, 2024
BOOMERANG FRANCHISE, LLC BALANCE SHEETS
| AS OF DECEMBER 31, | ||||
|---|---|---|---|---|
| 2023 | 2022 | |||
| ASSETS: | ||||
| CURRENT ASSETS | ||||
| Cash and equivalents | $ | 18,203 | $ | 7,376 |
| Accounts receivable | 20,155 | 18,006 | ||
| TOTAL CURRENT ASSETS | 38,358 | 25,382 | ||
| TOTAL ASSETS | $ | 38,358 | $ | 25,382 |
| LIABILITIES AND MEMBERS' (DEFICIT): | ||||
| CURRENT LIABILITIES | ||||
| Accounts payable and accrued expenses | $ | 6,745 | $ | 3,813 |
| Non-refundable deferred franchise sales, current portion | 20,700 | 7,900 | ||
| Notes payable, current portion | - | 341 | ||
| TOTAL CURRENT LIABILITIES | 27,445 | 12,054 | ||
| LONG-TERM LIABILITIES | ||||
| Non-refundable deferred franchise sales | 157,095 | 55,958 | ||
| Notes payable | 79,000 | 78,659 | ||
| TOTAL LIABILITIES | 263,540 | 146,671 | ||
| MEMBERS' (DEFICIT) | ||||
| Members' equity (deficit) | (62,130) | 55,63 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the total members' deficit for the company in 2022 was $(121,289). This figure represents the accumulated losses and other reductions in the ownership equity of Boomerang Franchise, LLC, the franchisor of Hyper Kidz, resulting in a negative balance. This deficit is a key indicator of the company's financial health and its ability to cover its liabilities with its assets.
For a prospective Hyper Kidz franchisee, this deficit figure is an important consideration. It suggests that the company has experienced financial challenges in the past, which could impact its ability to support franchisees, invest in innovation, or manage risks effectively. While a deficit does not necessarily indicate imminent failure, it warrants careful scrutiny of the company's financial statements, business plan, and strategies for improving profitability.
It is essential for potential franchisees to conduct thorough due diligence, including consulting with financial advisors and legal professionals, to assess the implications of the members' deficit on the long-term viability and stability of the Hyper Kidz franchise system. Understanding the reasons behind the deficit and the franchisor's plans to address it is crucial for making an informed investment decision. Furthermore, prospective franchisees should compare these figures with industry benchmarks and the financial performance of other franchise systems to gauge the relative risk and opportunity associated with investing in a Hyper Kidz franchise.