What was the allowance for doubtful accounts for 1 800 Packouts as of December 3, 2021?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
expressing an opinion on the\neffectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, th
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, the allowance for doubtful accounts as of December 31, 2021, was $32,710. This figure represents the amount of accounts receivable that 1 800 Packouts management estimated may not be collectible from franchisees. Accounts receivable consist of amounts due on franchisee accounts for various fees including royalties, support fees, branding fees, insurance, training, and expendable equipment.
The allowance for doubtful accounts is an accounting practice where a company sets aside an estimate of the portion of its accounts receivable that it anticipates it will not be able to collect. This is a contra-asset account that reduces the total reported value of accounts receivable on the balance sheet, providing a more realistic view of what the company expects to receive. The allowance for bad debts and other reserves are based upon the Company's historical experience with franchisees and considers the age of the receivable and the franchisees' ability to pay.
For a prospective 1 800 Packouts franchisee, this figure indicates the level of risk associated with collecting payments from franchisees. A higher allowance for doubtful accounts could suggest potential difficulties in franchisees meeting their financial obligations. Accounts are written-off when determined to be uncollectible and all reasonable efforts to collect the receivable have been exhausted. Accounts receivable do not include any amounts for interest. Reviewing this allowance over time can provide insights into the financial health and stability of the 1 800 Packouts franchise system.