What is the role of Ascent in the Batteries Plus Bulbs franchise system?
Batteries_Plus_Bulbs Franchise · 2025 FDDAnswer from 2025 FDD Document
Batteries Plus provides franchisees with a system of business training, site location, marketing, advertising programs and management support designed to assist the franchisee in opening and operating a Batteries Plus store.
Ascent operates a supply chain which purchases, warehouses and distributes inventory for the Batteries Plus owned and franchised stores.
Hong Kong and Shenzhen are utilized by Ascent and Batteries Plus to source inventory.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 2024 and 2023 (Dollars in thousands, except per share amounts)
NOTE B - SUMMARY OF ACCOUNTING POLICIES
Use of Estimates
Management uses estimates and assumptions in preparing the consolidated financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all petty cash and checking accounts to be cash and short-term investments with original maturities of three months or less when purchased to be cash equivalents.
Accounts Receivable
Accounts receivable are stated at the amount the Company expects to collect from outstanding balances. The Company extends unsecured trade credit to its customers in the ordinary course of business, but mitigates the associated credit risk by performing credit checks, establishing credit limits and actively pursuing past due accounts. Trade credit is generally extended on a short-term basis. Thus, trade accounts receivables do not bear interest or finance charges. The Company accounts for customer balances that it has determined to be uncollectible with a charge to earnings and a credit to a valuation allowance based upon its assessment of the current status of individual accounts. Balances that are still outstanding after the Company has exhausted all reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.
Merchandise Inventories
Inventories, which primarily consist of merchandise held for resale, are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out (Ascent) or average-cost (Batteries Plus operated stores) method.
Notes Receivable
Source: Item 21 — Financial Statements (FDD pages 79–80)
What This Means (2025 FDD)
According to the 2025 Batteries Plus Bulbs FDD, Ascent Battery Supply, LLC (Ascent) is a wholly-owned subsidiary of Batteries Plus, LLC. Ascent plays a crucial role in the Batteries Plus Bulbs franchise system by operating the supply chain. This includes purchasing, warehousing, and distributing inventory for both company-owned and franchised Batteries Plus Bulbs stores. Ascent also earns supplier commissions on purchases that are directly shipped to franchised stores, which are included in other operating income on the consolidated statements of net income.
Furthermore, the FDD states that Ascent and Batteries Plus utilize Hong Kong and Shenzhen to source inventory. For Batteries Plus operated stores, the cost of merchandise inventories is determined using the average-cost method, while Ascent uses the first-in, first-out (FIFO) method. Revenues are recognized by Ascent as products are shipped to franchised stores, and at the point of shipment on a common carrier, the franchisee obtains control of the product.
Vendor allowances, which are based on a percentage of orders placed for purchases with specific vendors by Ascent, are recognized upon the vendor's shipment of the goods and are recorded as a reduction of the cost of merchandise sold. This indicates that Ascent manages key aspects of the supply chain and inventory management for the Batteries Plus Bulbs system, impacting both revenue recognition and cost management for franchisees and the parent company.