How is the Capital Account determined and maintained for each Marble Slab Creamery member?
Marble_Slab_Creamery Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.3 Capital Accounts. A capital account ("Capital Account") shall be determined and maintained for each Member in accordance with the principles of Regulation Section 1.704-1(b) at all times throughout the full term of the Company. In the event of a permitted sale or assignment of all or any part of a Member's interest in the Company, the Capital Account of the transferor shall become the Capital Account of the transferee to the extent it relates to the transferred Company interest.
The book value of all Company properties shall be adjusted to equal their respective gross fair market values, as determined by the Manager as of the following times: (1) in connection with the acquisition of an interest in the Company by a new or existing Member for
more than a de minimis capital contribution; (2) in connection with the liquidation of the Company as defined in Regulation Section 1.704-(1)(b)(2)(ii)(g); or (3) in connection with a more than de minimis distribution to a retiring or a continuing Member as consideration for all or a portion of his or its interest in the Company. In the event of a revaluation of any Company assets hereunder, the Capital Accounts of the Members shall be adjusted, including continuing adjustments for depreciation, to the extent provided in Regulation Section 1.704-(1)(b)(2)(iv)(f). The Capital Account of each Member as of the date of Schedule 1 is set forth on Schedule 1.
Source: Item 23 — RECEIPT (FDD pages 101–346)
What This Means (2025 FDD)
According to the 2025 Marble Slab Creamery FDD, a capital account will be determined and maintained for each member in accordance with the principles of Regulation Section 1.704-1(b) throughout the full term of the company. If a member sells or assigns their interest in the company, the capital account of the transferor becomes the capital account of the transferee, relating to the transferred company interest.
The book value of all company properties will be adjusted to equal their respective gross fair market values, as determined by the Manager. This adjustment occurs (1) when a new or existing member acquires an interest in the company for more than a de minimis capital contribution, (2) during the liquidation of the company as defined in Regulation Section 1.704-(1)(b)(2)(ii)(g), or (3) when a retiring or continuing member receives a more than de minimis distribution as consideration for their interest in the company.
In the event of a revaluation of any company assets, the capital accounts of the members will be adjusted, including continuing adjustments for depreciation, as provided in Regulation Section 1.704-(1)(b)(2)(iv)(f). The initial capital account of each member is set forth on Schedule 1 of the agreement. This detailed accounting ensures that each member's financial stake in Marble Slab Creamery is accurately tracked and adjusted to reflect changes in the company's value and the member's contributions or distributions.