What was the net amount of accounts receivable for Auntie Annes after allowance for credit losses in 2023?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
| December 31, 2023 | December 25, 2022 | |
|---|---|---|
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 22,662 | $ 31,196 |
| Restricted cash and cash equivalents - securitization | 29,582 | 27,456 |
| Accounts receivable, net of allowance for credit losses of | ||
| $1,143 and $1,383 in 2023 and 2022, respectively | 37,049 | 31,935 |
| Inventories | 978 | 1,116 |
| Prepaid expenses and other current assets | 9,263 | 8,720 |
| Advertising funds assets | 7,643 | 6,972 |
| Intercompany receivables from Parent | 3,277 | 3,277 |
| Total current assets | 110,454 | 110,672 |
Source: Item 23 — RECEIPTS (FDD pages 106–366)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, the net accounts receivable after allowance for credit losses was $37,049 as of December 31, 2023. The allowance for credit losses that was deducted from the gross accounts receivable to arrive at this net figure was $1,143 in 2023. In comparison, the net accounts receivable as of December 25, 2022, was $31,935, after deducting an allowance for credit losses of $1,383.
Accounts receivable primarily consist of amounts due from Auntie Annes franchisees, vendors, licensees, and gift card retailers. The health of these receivables is closely tied to the business trends of Auntie Annes's brands and the overall market conditions within the quick-service restaurant industry, both domestically and internationally. This means that if Auntie Annes's brand is doing well and the quick-service restaurant industry is thriving, franchisees are more likely to pay their dues on time.
Auntie Annes mitigates credit risk through a large number of franchisees and licensees, along with the short-term nature of the receivables. The FDD states that no single franchisee or licensee accounted for more than 10% of the total accounts and notes receivable, nor more than 10% of total revenues for the fiscal year ended December 31, 2023. This diversification reduces the impact if any one franchisee or licensee defaults on their payments.
The allowance for credit losses is determined by Auntie Annes based on factors such as the aging of customer receivables, write-off history, the financial condition of its franchisees and licensees, current economic conditions, and forecasts of future conditions. This allowance represents the company's best estimate of the receivables that may not be collected. Accounts receivable are written off against this allowance when it becomes probable that the receivable will not be recovered. However, the actual recovery of these receivables is subject to future economic events and other conditions that are beyond Auntie Annes's control.