What interest rate does the loan from a member that accrues interest carry for Kidokinetics, and is it due on demand?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
lated party loans:
| Loan from a member, which is due on demand and does not accrue interest | $ | 3,120 | $ 3,120 | $ | 3,120 |
|---|---|---|---|---|---|
| Loan from a member, which accrues interest at a rate of 10% per annum and is due on demand. Balance includes accrued interest. |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, a loan from a member accrues interest at a rate of 10% per annum. This means that the loan accumulates interest annually at a rate of 10% of the outstanding balance.
Additionally, the loan is due on demand. This signifies that Kidokinetics is obligated to repay the loan whenever the member requests it. The balance listed includes any accrued interest, meaning the total amount due at any given time incorporates both the original loan amount and the accumulated interest.
For a prospective franchisee, this information is relevant because it provides insight into the company's financial obligations and its relationship with its members. The fact that a member can demand repayment at any time introduces a degree of financial uncertainty for Kidokinetics. However, it is not uncommon for privately held companies, especially franchisors, to have loans from members or shareholders as part of their capital structure.