Are the notes receivable from My Salon Suite franchisees secured, and if so, by what?
My_Salon_Suite Franchise · 2025 FDDAnswer from 2025 FDD Document
Notes receivable are due from franchisees and bear interest at rates per annum ranging from 6% to 10%. The notes are generally secured by the assets of the related stores. balance as of December 31, 2024 and 2023 were $269,379 and $184,822, respectively. The allowance for credit losses balance related to notes receivable was $48,651 and $28,304 as of December 31, 2024 and 2023, respectively.
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 the 2025 My Salon Suite Franchise Disclosure Document, notes receivable from franchisees are generally secured. These notes carry annual interest rates ranging from 6% to 10%. The notes are typically secured by the assets of the related My Salon Suite stores.
As of December 31, 2024, the notes receivable balance was $269,379, compared to $184,822 on December 31, 2023. The allowance for credit losses related to these notes was $48,651 in 2024 and $28,304 in 2023. This allowance indicates the amount My Salon Suite anticipates it may not collect from these notes.
For a prospective My Salon Suite franchisee, this means that if they finance a portion of their franchise investment through a note with the franchisor, My Salon Suite will likely require the assets of their salon to be used as collateral. The interest rate on these notes will be between 6% and 10%. Franchisees should carefully consider these rates and the implications of securing the loan with their business assets.