Does Amorino extend credit to its customers, and if so, is it interest-bearing?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company extends non-interest bearing credit to its customers in the ordinary course of business. Accounts receivable are recorded in the amounts due to the Company by its franchisees based on the term in the franchise agreement. An allowance for doubtful accounts receivable is estimated and recorded based on management's evaluation of uncollected balances and the
NOTES TO FINANCIAL STATEMENTS--Continued
CPUSA LLC (A Wholly-Owned subsidiary of Amorino USA Corp.)
NOTE A--DESCRIPTION OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Company's historical experience, current conditions, and reasonable and supportable forecasts. Individual balances are written off against the allowance when they are determined to be uncollectable. During the years ended December 31, 2024, 2023 and 2022, the Company had no bad debt expense as the collection for the accounts receivable was reasonably certain. There was no accounts receivable recorded at January 1, 2022. Accounts receivable due from two of the Company's franchisees represented 100% of the Company's total net accounts receivable at December 31, 2024 and 2023, respectively.
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to Amorino's 2025 Franchise Disclosure Document, Amorino extends non-interest bearing credit to its customers in the ordinary course of business. This refers to the relationship between Amorino and its franchisees, not the franchisees and their customers. The accounts receivable are recorded based on the terms in the franchise agreement.
Amorino estimates and records an allowance for doubtful accounts receivable based on management's evaluation of uncollected balances, historical experience, current conditions, and reasonable forecasts. If an account is determined to be uncollectible, it is written off against the allowance. For the years 2022, 2023, and 2024, Amorino had no bad debt expense because the collection of accounts receivable was reasonably certain.
At the end of 2023 and 2024, accounts receivable from two of Amorino's franchisees represented 100% of the company's total net accounts receivable. This indicates a high concentration of risk, as the financial health of these two franchisees significantly impacts Amorino's accounts receivable. This is further reinforced by the statement that revenue from each franchisee represents a significant concentration of the Company's total revenue for each of the years ended December 31, 2024, 2023, and 2022.