What was the total amount allocated to goodwill in the purchase price for My Salon Suite?
My_Salon_Suite Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Notes to Consolidated Financial Statements
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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, during the acquisition of additional SMF Corporate locations in 2024, $1,505,262 was allocated to goodwill. This figure is part of the total consideration of $4,224,473 paid by My Salon Suite. Goodwill, in this context, represents the excess of the purchase price over the fair value of the identifiable net assets acquired.
For a prospective My Salon Suite franchisee, understanding how goodwill is accounted for in corporate acquisitions can provide insight into the company's growth strategy and financial health. Goodwill is not amortized but is evaluated for impairment, meaning its value is assessed periodically, and if it has decreased, the company will recognize a loss.
The allocation to goodwill can also affect the company's tax obligations, as the company expects to deduct the resulting goodwill for tax purposes. Reviewing the company's approach to goodwill and intangible assets can help potential franchisees assess the financial stability and long-term strategy of My Salon Suite.