What was the total amount of notes receivable for Aerus in 2023 before accounting for credit losses?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | |
|---|---|---|
| Notes receivable | $710,241 | $701,476 |
| Less allowance for credit losses | (677,266) | (570,045) |
| Notes receivable, net | 32,975 | 131,431 |
| Less current portion of notes receivable | (30,000) | (40,000) |
| Long-term portion of notes receivable | $2,975 | $91,431 |
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the total amount of notes receivable in 2023, before accounting for credit losses, was $701,476. Notes receivable primarily consist of amounts due from franchisees. These notes often relate to the sale of franchise rights to Aerus's branch locations and certain branch assets.
The notes receivable from franchisees typically bear interest, ranging from 7% to 10% per annum, with original terms of three to five years. These notes are generally unsecured, meaning Aerus does not hold specific collateral to guarantee repayment. In 2020, Aerus began financing notes to franchisees for fees paid to become a Beyond Franchise, which allows the franchisee to sell items not available to other franchises. For the year ended December 31, 2023, $39,980 in notes were financed by Aerus for Beyond Franchises. These particular notes do not bear interest.
The allowance for credit losses is an estimate of potential uncollectible amounts, based on experience, economic conditions, and the financial health of the borrowers (franchisees). Aerus assesses credit risk based on payment history and the franchisee's business level. The net notes receivable (after subtracting the allowance for credit losses) provides a more conservative view of what Aerus realistically expects to collect. The current portion of notes receivable represents the amount expected to be collected within the next year, while the long-term portion is due beyond one year.