What was the total members' deficit for Hyper Kidz as of December 31, 2023?
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 as of December 31, 2023, was ($225,182). This figure represents the accumulated shortfall in members' equity, taking into account factors such as members' equity (deficit) which was ($62,130) and due from affiliates, net which was ($163,052).
A members' deficit indicates that the liabilities and obligations of Hyper Kidz exceeded its assets. This can arise from operating losses, distributions to members, or other factors that reduce the equity balance. For a prospective franchisee, a significant deficit may raise concerns about the financial stability of the franchisor and its ability to support franchisees.
It is important to note that the members' deficit can fluctuate from year to year. In 2022, the total members' deficit was ($121,289). A prospective franchisee should investigate the reasons behind the deficit and understand the franchisor's plan to address it. This includes reviewing the franchisor's financial statements, understanding the relationship with affiliates, and assessing the overall financial health of the Hyper Kidz franchise system.
Franchisees should seek clarification from Hyper Kidz regarding the components of the members' deficit, the strategies in place to improve the financial position, and the potential impact on franchisees. Consulting with a financial advisor is recommended to fully understand the implications of the franchisor's financial condition.