Does the FDD include a statement of retained earnings for Mrcool?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
0- 5,025 | | NET INCREASE IN CASH | 847 | | -0- | | CASH AT BEGINNING OF YEAR | -0- | | -0- | | CASH AT END OF YEAR | 847 | | -0- | | SUPPLEMENTAL CASH FLOW DATA Interest paid Income tax paid | 25 -0- | | -0- -0- |
A SIGNIFICANT ACCOUNTING POLICIES
BUSINESS ACTIVITY
Mr. Cool Franchising LLC (the "Company") is a limited liability company and the member's liability is limited to their investment. The Company was organized in Kentucky on August 20, 2021, for the purpose of offering franchise opportunities to entrepreneurs who want to own and operate their own entity that offers HVAC service and products featuring the MRCOOL product line. The company offers individual unit franchises and area development franchises for the development of multiple units within a designated territory.
BASIS OF ACCOUNTING
The Company maintains its records on the accrual basis of accounting.
CASH AND CASH EQUIVALENTS
Cash equivalents include highly liquid debt instruments having original maturities of three months or less.
REVENUE RECOGNITION
At inception, the Company adopted Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606"). Revenue is recognized when performance obligations under the terms of the contracts with our customers are satisfied. The Company will generate revenues by selling franchise licenses, which include an initial fee generally collected upfront, selling products to franchisees, and royalties which are generally collected as earned.
In recognizing revenue, the company has elected to apply the practical expedient to account for certain preopening services performed for franchisees as distinct from the franchise license itself, and also has made an accounting policy election to account for all such services as a single performance obligation.
DEBT
The entity accounts for debt as current if the debt is due within one year of the balance sheet date or is cancelable or callable. The company accounts for d
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 54–55)
What This Means (2025 FDD)
The 2025 Mrcool Franchise Disclosure Document includes information about the company's accounting policies, revenue recognition, and advertising expenses. However, the document does not explicitly include a statement of retained earnings. The FDD does state that Mr. Cool Franchising LLC was organized in Kentucky on August 20, 2021, to offer franchise opportunities for HVAC services and products featuring the MRCOOL product line. The company recognizes revenue when performance obligations are satisfied, such as selling franchise licenses, products, and collecting royalties.
The accounting policies section of the FDD explains that the company maintains its records on the accrual basis of accounting and defines cash equivalents as highly liquid debt instruments with original maturities of three months or less. The document also mentions that advertising costs are expensed as incurred, with advertising expenses amounting to $779 and $0 for the years ended December 31, 2023 and 2022, respectively.
While the FDD provides details on various financial aspects of Mrcool, the absence of a specific statement of retained earnings means that prospective franchisees would need to seek additional information from Mrcool regarding the company's accumulated profits or losses over time. This information is crucial for assessing the financial health and stability of the franchisor. A prospective franchisee should ask Mrcool for the statement of retained earnings to get a better understanding of the company's financial position.