For Zoomin Groomin, what is the stated basis for allocating overhead costs from the managing affiliate to the company?
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 by the affiliate. This allocation includes shared labor, utilities, office space, and other overhead costs.
The FDD states that Zoomin Groomin management deems this allocation method reasonable. The same allocation method is used across multiple franchisor affiliates. This suggests a standardized approach to distributing costs among related entities.
The financial statements reflect these allocations, and adjustments are made through affiliate loan accounts. This indicates that the overhead expenses are formally documented and reconciled within the company's accounting system. For a prospective franchisee, this means that Zoomin Groomin has a structured method for handling shared expenses with its affiliates, which could provide transparency and consistency in financial reporting.