What factors does Anago consider when determining the allowance for doubtful accounts?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
hree months or less to be cash equivalents.
NOTE A - PRINCIPLES OF CONSOLIDATION, NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Agency Billing
The Company does maintain certain master franchisees (EHLB, Inc., PBTR, Inc., CCTD Inc. and APLR, Inc.). These entities acquire and sell contracts to franchisees throughout their territorial areas. These entities invoice and collect outstanding balances on these contracts on behalf of the franchisees which is considered "agency billings" or "contract sales". Agency billings collected are disbursed to the franchise on a monthly basis.
Accounts Receivable, Net
These entities act as a flow through for the agency billings and therefore is reported net on the consolidated statement of operations. Agency billing collections received prior to the services provided have been recorded as deferred revenue on the consolida
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, the company estimates an allowance for doubtful accounts based on several factors. These include the credit risk of specific franchisees, historical trends in collections, and any other pertinent information that could affect collectibility. Anago's policy is not to charge interest or finance charges on past due receivable balances. Balances that are more than 30 days old are considered past due.
Anago charges off uncollectible receivable balances through the allowance for doubtful accounts. This occurs when management concludes that an account receivable will not be collected, and all collection methods have been exhausted. The company generally does not require collateral or other security to support accounts receivable.
For prospective franchisees, this means that Anago assesses the financial stability and payment history of its franchisees to determine the likelihood of collecting royalties and fees. The allowance for doubtful accounts was $-0- at the end of 2022, 2023, and 2024. This indicates that Anago has not had significant issues with uncollectible accounts receivable from franchisees in recent years. However, franchisees should be aware that Anago closely monitors accounts receivable and will pursue collection efforts if balances become past due.