What was the 'Acquisition of a business, net of cash acquired' for My Salon Suite in 2024?
My_Salon_Suite Franchise · 2025 FDDAnswer from 2025 FDD Document
| Cash assumed during acquisition | $ 735,160 |
|---|---|
| Working capital | 97,369 |
| Right of use asset | 1,108,595 |
| Property and equipment | 1,029,772 |
| Intangibles – trade name | 52,950,000 |
| Intangibles – program materials | 425,000 |
| Intangibles – internally developed software | 80,000 |
| Intangibles – franchise agreements | 5,100,000 |
| Goodwill | 19,617,550 |
| Deferred revenue | (2,428,197) |
| Lease liabilities | (1,108,595) |
| Total consideration | $ 77,606,654 |
The Company does expect to deduct the resulting goodwill for tax purposes. The Company incurred $1,480,792 and $2,869,038 of transaction costs for the year ended December 31, 2024, and December 31, 2023, respectively, which are included in the accompanying consolidated statement of operations.
Acquisition of additional SMF Corporate locations - 2024
The Company executed asset purchase agreements on January 30, 2024 for 2 corporate salon suite locations owned by Mera Studio Suites, LLC and on August 1, 2024 for 1 corporate salon suite location owned by Pylons, LLC, both third parties. The acquisitions were paid in cash and partially funded by capital contributed from the Parent. These purchases were made as part of the Company's strategic growth initiative to expand the SMC corporate locations.
The total cash consideration paid of $4,224,473 was allocated to the assets acquired and liabilities assumed by the Company based on management estimates of their f
Source: Item 17 — (r) of the FDD and Section 13 of the Franchise Agreement disclose the existence of certain covenants restricting competition to which Franchisee must agree. The Commissioner has held that covenants restricting competition contrary to Section 9-08-06 of the North Dakota Century Code, without further disclosing that such covenants may be subject to this statue, are unfair, unjust, or inequitable within the intent of Section 51-19-09 of the North Dakota Franchise Investment Law. The FDD and the Franchise Agreement are amended accordingly to the extent required by law. (FDD pages 230–274)
What This Means (2025 FDD)
According to My Salon Suite's 2025 Franchise Disclosure Document, the company executed asset purchase agreements on January 30, 2024, for two corporate salon suite locations owned by Mera Studio Suites, LLC, and on August 1, 2024, for one corporate salon suite location owned by Pylons, LLC. These acquisitions were part of the company's strategic growth initiative to expand its corporate locations. The total cash consideration paid for these acquisitions in 2024 was $4,224,473. This amount was allocated to the assets acquired and liabilities assumed based on management estimates of their fair value. Additionally, My Salon Suite recognized a $34,687 bargain purchase gain on its single salon suite acquisition from Pylons, LLC, primarily related to additional construction change order costs not previously agreed to in the purchase agreement.
In 2024, My Salon Suite also incurred $1,480,792 in transaction costs related to these acquisitions. These costs are included in the company's consolidated statement of operations. For comparison, in 2023, the company incurred $2,869,038 in transaction costs related to acquisitions. These figures provide insight into the scale and financial impact of My Salon Suite's acquisition activities during these periods.
For a prospective franchisee, understanding these acquisition activities can be important. It demonstrates the company's growth strategy and its willingness to invest in expanding its corporate locations. While this activity does not directly impact franchisees, it can be seen as a sign of the company's financial health and commitment to growth, which can indirectly benefit franchisees through increased brand recognition and potentially improved services and support.