What does All Team consider when determining if collection is reasonably assured for revenue recognition?

According to All Team's 2025 Franchise Disclosure Document, the company recognizes revenue when services are provided, there is persuasive evidence of an arrangement, the price is fixed, and collection is reasonably assured, in accordance with ASC 606. All Team extends credit to its customers and charges fees as per the franchise agreement.

To account for potential credit losses, All Team provides an allowance for credit losses on accounts receivable. This allowance is determined through a review of the current status of existing receivables and management's evaluation of a periodic aging of accounts. This means All Team assesses how long invoices have been outstanding and the likelihood of them being paid based on past payment behavior and current financial standing of their customers.

For a prospective All Team franchisee, this means that the franchisor takes steps to ensure that revenue is only recognized when it is likely to be collected. The allowance for credit losses indicates that not all revenue invoiced is guaranteed to be received, and the company actively manages and estimates these potential losses. Understanding how All Team manages accounts receivable and credit losses can help a franchisee better understand the financial health and stability of the franchise system.