What is the primary concentration of credit risk for Aw?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
r this arrangement, franchisees are granted the right to operate a Papa Ray's Restaurant for a specified number of years.
Concentration of Credit Risk-Financial instruments that potentially expose the Company to concentration of credit risk primarily consist of cash and cash equivalents. The balances in the Company's cash accounts did not exceed the Federal Deposit Insurance Company's (FDIC
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the company's primary concentration of credit risk involves cash and cash equivalents. The FDD states that financial instruments potentially expose the company to credit risk, mainly consisting of cash and cash equivalents.
Aw mitigates this risk by ensuring that the balances in its cash accounts do not exceed the Federal Deposit Insurance Company's (FDIC) insurance limit of $250,000. This means that the company's cash and cash equivalents are maintained with accredited financial institutions, and the deposits are insured up to the FDIC limit.
For a prospective franchisee, this indicates that Aw takes steps to manage its financial risks related to cash holdings. It is a common practice for franchisors to maintain cash balances within FDIC insurance limits to protect against potential losses due to bank failures or other credit-related issues. This approach helps ensure the stability and security of Aw's financial resources.