What happens to uncollectible receivable balances for Anago franchisees?

According to Anago's 2025 Franchise Disclosure Document, uncollectible receivables from clients can be deducted when calculating Gross Revenues, but only if those amounts were previously included in Gross Revenues and Royalty Fees and other amounts were paid on them. This means that if an Anago subfranchisor has already paid royalties on revenue that later becomes uncollectible, they can adjust their Gross Revenues to account for the loss.

This policy protects the subfranchisor from paying royalties on income they never actually receive. It is a fairly standard practice in franchising, where franchisees typically pay royalties on gross sales, regardless of whether they collect all payments from customers.

However, it is important to note the condition that the cash, credit, or receivables must represent amounts previously included in Gross Revenues where Royalty Fees and other amounts were paid. This implies careful record-keeping is necessary to demonstrate that royalties were indeed paid on the uncollected amounts to justify the deduction.