What was the net accounts receivable for Afuri Ramen Dumpling?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
y exceed federally insured limits. The Company has not experienced any losses in such accounts.
Accounts receivable – Accounts receivable from franchisees are generally unsecured. Management charges a 5% late fee and 1.5% interest per month on unpaid balances. No revenue was recognized for the years ended December 31, 2021 and 2020, related to these charges. The Company establishes an allowance based on experience and analysis of specific franchisees, taking into consideration the age of past due accounts and an assessment of the franchisee's ability to pay. Management considers all accounts receivables to be collectible; therefore, no allowance has been established for doubtful accounts. There was no bad debt expense for the years ended December 31, 2021 and 2020.
Property and equipment – Property and equipment are stated at cost less accumulated depreciation.
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
The 2024 Franchise Disclosure Document for Afuri Ramen Dumpling does not explicitly state the net accounts receivable balance. However, it does provide some information regarding accounts receivable.
According to the FDD, accounts receivable from Afuri Ramen Dumpling franchisees are generally unsecured. The company charges a 5% late fee and 1.5% interest per month on unpaid balances. Despite these charges, the company did not recognize any revenue related to these charges for the years ended December 31, 2021, and 2020.
The FDD states that Afuri Ramen Dumpling establishes an allowance for doubtful accounts based on experience and analysis of specific franchisees, considering the age of past due accounts and the franchisee's ability to pay. However, management considered all accounts receivables to be collectible, so no allowance has been established for doubtful accounts, and there was no bad debt expense for the years ended December 31, 2021, and 2020. The FDD also notes that four franchisees accounted for 93% and 100% of the accounts receivable balance as of December 31, 2021, and 2020, respectively.
Prospective franchisees should inquire with Afuri Ramen Dumpling's management about the specific net accounts receivable figures for recent years to gain a clearer understanding of the company's financial health and the payment behavior of its franchisees. Understanding the concentration of accounts receivable among a small number of franchisees is also crucial for assessing potential risks.