What does My Salon Suite consider to be cash equivalents?
My_Salon_Suite Franchise · 2025 FDDAnswer from 2025 FDD Document
ling $504,916 were paid at closing and are included in the accompanying consolidated statements of operations.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies followed in the preparation of these consolidated financial statements.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. The Company maintains cash in financial institutions, which at times may exceed federally insured limits. The Company believes it is not exposed to any significant credit risk on such accounts. As of December 31, 2024 and 2023, cash and cash equivalents include $349,278 and $244,637, respectively, held in foreign bank
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 considers highly liquid investments with maturities of three months or less to be cash equivalents. The company maintains cash in financial institutions, which at times may exceed federally insured limits. As of December 31, 2024 and 2023, cash and cash equivalents include $349,278 and $244,637, respectively, held in foreign bank accounts.
My Salon Suite maintains some of its cash in U.S. transaction accounts which are insured by the Federal Deposit Insurance Corporation up to a maximum of $250,000 per depositor. As of December 31, 2024, the Company's uninsured deposits in its deposit accounts with a U.S. bank totaled approximately $2,904,660. The company believes it is not exposed to any significant credit risk on such accounts.
For a prospective franchisee, this definition is important for understanding My Salon Suite's financial statements and how they manage their liquid assets. Knowing that the company considers investments with short-term maturities (three months or less) as cash equivalents provides insight into their liquidity management practices. The disclosure about maintaining cash in financial institutions, sometimes exceeding insured limits, highlights a potential risk, although My Salon Suite believes they are not exposed to significant credit risk.