What does Itan's management believe regarding the company's credit risk with respect to its cash?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
ies - The Company follows the alternative accounting standard for private companies with respect to entities under common control. As such, entities under common control have not been evaluated under the guidance in the variable interest subsections of the Financial Accounting Standards Board ("FASB") ASC 810.
Fair value measurements - The Company follows accounting standards consistent with the FASB codification which defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements for all fi
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, management believes that the company faces no significant credit risk regarding its cash holdings. The document specifies that Itan considers financial instruments with a fixed maturity date of less than three months as cash equivalents. Itan holds its cash deposits in a regional bank, and these accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per bank as of December 31, 2024 and 2023.
The FDD notes that as of December 31, 2024, Itan had $0 in excess of the FDIC limit, while it had $104,387 in excess of the limit as of December 31, 2023. The FDIC insurance coverage helps to protect the company's cash deposits up to the insured limit.
For a prospective franchisee, this indicates that Itan's management is confident in their cash management practices and does not foresee significant risks related to their cash deposits. The presence of FDIC insurance further mitigates potential risks associated with bank failures, providing a level of security for the company's cash assets. Franchisees may want to inquire about the specific bank Itan uses and its financial stability to gain further comfort.