How does Bambu determine the allowance for doubtful accounts related to franchisee receivables?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
ords an accounts receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized after invoicing. The Company reports these receivables at net realizable value.
Management determines the allowance for doubtful accounts based on historical losses, current expectations, and economic conditions. On a continuing basis, management analyzes delinquent accounts receivable and, once these accounts receivable are determined to be uncollectible, they are written off through a charge against an existing allowance account. The allowance account is reviewed regularly and adjusted against earnings as appropriate. The Company determined that an allowance on outstanding franchisee receivables of $0 and $0 was necessary as of December 31, 2024, and 2023. Franchisee bad debt
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, the allowance for doubtful accounts related to franchisee receivables is determined by management based on several factors. These factors include historical losses, current expectations, and prevailing economic conditions. This means Bambu assesses past instances where franchisees failed to pay, considers the current financial health and outlook of its franchisees, and takes into account the broader economic climate to estimate potential uncollectible amounts. This is a standard accounting practice to ensure the company's financial statements accurately reflect potential losses.
On a continuing basis, Bambu analyzes delinquent accounts receivable. When these accounts are deemed uncollectible, they are written off against an existing allowance account. The allowance account is regularly reviewed and adjusted against earnings as needed. This ongoing process allows Bambu to promptly address and account for debts that are unlikely to be recovered from franchisees.
As of December 31, 2024, and 2023, Bambu determined that an allowance on outstanding franchisee receivables of $0 was necessary for both years. Franchisee bad debt expense was $111,673 for the year ended December 31, 2024, $12,000 for the year ended December 31, 2023, and $0 for the year ended December 31, 2022. Franchisee amounts written off were $111,673 for the year ended December 31, 2024, $12,000 for the year ended December 31, 2023, and $0 for the year ended December 31, 2022. This indicates that while no allowance was deemed necessary in 2023 and 2024, there were instances of bad debt and write-offs, particularly in 2024, suggesting potential financial challenges faced by some franchisees.