Are there any notes to the financial statements included for Mrcool?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
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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 debt as non-current if the obligation does not expire or is not due within one year.
ADVERTISING
The Company expenses advertising costs as incurred. Advertising expense amounted to $779 and $0 for the years ended December 31, 2023 and 2022, respectively.
INCOME TAX
The Company has elected to be taxed as a Partnership under the Internal Revenue Code and applicable state statutes. As a partnership, the income of the Company flows through to the members to be taxed at the individual level rather than the corporate level. Accordingly, the Company will have no federal or state tax liability. The Company is liable for state and local license fees based on profitability or revenues.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.
MR. COOL FRANCHISING, LLC NOTES TO FINANCIAL STATEMENTS (continued)
B RELATED PARTY TRANSACTIONS
Related parties are entities which share common ownership with the Company. The Company has unsecured loans, due on demand, that bear interest at the Applicable Federal Rate (AFR) to the following related parties at December 31,
| 2023 | 2022 | |
|---|---|---|
| MR. Cool LLC | $ 9,757 | $ -0- |
| Ingrams Farms | 15,622 | 5,025 |
| 25,379 | 5,025 |
The Company has accrued $870 and $25 of interest on these loans during the years ended December 31, 2023 and 2022, respectively.
C RISKS AND UNCERTAINTIES
The Company is a business whose planned principal operations are identifying and attracting potential franchisees for the MRCOOL product line. The Company is actively seeking franchisees and has not yet established any franchise agreements.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 54–55)
What This Means (2025 FDD)
Yes, according to Mrcool's 2025 Franchise Disclosure Document, the financial statements include related notes. These notes cover various aspects of Mrcool's financial activities and accounting practices.
Specifically, the notes address advertising expenses, which were $779 and $0 for the years ended December 31, 2023 and 2022, respectively. The notes also explain Mrcool's income tax structure, stating that the company is taxed as a Partnership, meaning income flows through to the members and is taxed at the individual level. Therefore, Mrcool itself has no federal or state tax liability, although it is liable for state and local license fees.
Additionally, the notes discuss related party transactions, which involve entities sharing common ownership with Mrcool, and unsecured loans between these parties. The notes also mention the use of estimates in preparing the financial statements, acknowledging that management must make estimates and assumptions that could lead to actual results differing from those estimates. Finally, the notes also discuss risks and uncertainties and subsequent events.