What was the provision for credit losses for Bath Tune Up as of December 31, 2023?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
| December 31, 2024 | December 31, 2023 | |
|---|---|---|
| Cash flows from operating activities: | ||
| Net income $ 1,588,884 $ 2,271,476 | ||
| Adjustments to reconcile Net income to Net cash provided by | ||
| operating activities | ||
| Depreciation 277,279 211,930 | ||
| Amortization of operating right-of-use lease assets 55,233 53,752 | ||
| Provision for credit losses 894,504 630,961 | ||
| Loss on disposal of assets — 3,651 | ||
| Foreign exchange (gain) loss 15,613 (9,062) | ||
| Decrease (increase) in assets: | ||
| Accounts receivable (254,306) (272,177) | ||
| Notes receivable (224,976) (460,630) | ||
| Rebates receivable 73,413 129,675 | ||
| Prepaid expenses 5,025 109,994 | ||
| Other current assets 11,379 10,096 | ||
| Other assets (4,000) — | ||
| Increase (decrease) in liabilities: | ||
| Accounts payable 312,705 (155,708) | ||
| Accrued liabilities (39,319) 33,690 | ||
| Operating lease liability (57,206) (59,809) | ||
| Advertising advances and deposits (146,679) (196,847) | ||
| Deferred revenue 27,529 (513,538) | ||
| Net cash provided by operating activities 2,535,078 1,787,454 |
Source: Item 23 — RECEIPTS (FDD pages 52–222)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, the provision for credit losses as of December 31, 2023, was $630,961. This figure reflects an estimate of potential losses from uncollectible accounts receivable and notes receivable. It is an accounting measure used to reduce the book value of assets to an amount that more closely reflects their net realizable value.
For a prospective Bath Tune Up franchisee, understanding the provision for credit losses can offer insights into the financial health and risk management practices of the franchisor. A higher provision for credit losses might suggest that Bath Tune Up has experienced difficulties in collecting payments from its franchisees or customers. Conversely, a lower provision could indicate more effective credit control and a healthier customer base.
It's important to note that the provision for credit losses is an estimate and can be influenced by various factors, including economic conditions, industry trends, and the franchisor's specific credit policies. While this figure provides a snapshot of potential credit-related risks, further due diligence, including a review of the franchisor's financial statements and discussions with existing franchisees, is advisable to gain a comprehensive understanding of the financial stability of Bath Tune Up.