How does Zoomin Groomin adjust the repayment of overhead expenses allocated from the managing affiliate?
Zoomin_Groomin Franchise · 2025 FDDAnswer from 2025 FDD Document
During the year ended December 31, 2022, the Company began allocating overhead costs of the managing affiliate for services provided to the Company based on the percentage of time spent on the Company by affiliate through the use of shared labor, utilities, office space, and other overhead costs. The allocation was deemed reasonable by management and the services are allocated by the same allocation method amongst multiple franchisor affiliates. The summary allocations are reflected in the financial statements and the repayment is adjusted through the affiliate loan accounts. The details of the overhead expenses are as follows:
Source: Item 9 — 01. Financial Statements and Exhibits. (FDD pages 68–156)
What This Means (2025 FDD)
According to Zoomin Groomin's 2025 Franchise Disclosure Document, overhead costs from the managing affiliate are allocated to the company based on the percentage of time spent on the company's services. These services include shared labor, utilities, office space, and other overhead costs. The management deems this allocation reasonable, and the same method is used across multiple franchisor affiliates.
The allocation of these costs is reflected in the financial statements of Zoomin Groomin. The repayment of these allocated costs is then adjusted through the affiliate loan accounts. This means that the financial statements will show how much overhead has been allocated to Zoomin Groomin, and any repayment adjustments will be made via the loan accounts between Zoomin Groomin and its affiliates.
For a prospective franchisee, this related party transaction indicates that Zoomin Groomin shares resources with other related entities, and a portion of the costs for those shared resources are allocated to Zoomin Groomin. The franchisee should be aware that these allocations can impact the company's financial performance and should review the financial statements carefully to understand the nature and extent of these related party transactions. Understanding these transactions is crucial for assessing the financial health and stability of Zoomin Groomin.