What was the total amount of Beef O Bradys franchisee receivables converted to notes in 2022?
Beef_O_Bradys Franchise · 2025 FDDAnswer from 2025 FDD Document
and specific allowances for known troubled accounts. The allowance for expected credit losses is determined based on the amount the Company expects to collect over the life of the receivable. During 2024 and 2023, there was minimal activity in the allowance for credit losses as the allowance for credit losses was determined to be trivial.
From time to time, the Company will convert past due franchisee receivables to interest-free notes in order to formalize the repayment terms of past due balances and therefore increase the probability of collecting amounts due from franchisees. The Company adopted the practical expedient under ASC 606, where a significant financing component is not considered when the customer payment for those services will be one year or less. If greater than a year, the Company will evaluate whether there is a significant financing component.
Source: Item 23 — RECEIPTS. (FDD pages 66–330)
What This Means (2025 FDD)
The 2025 Beef O Bradys FDD does not explicitly state the total amount of franchisee receivables converted to notes during 2022. However, it does mention the practice of converting past due franchisee receivables into interest-free notes to formalize repayment terms and increase the likelihood of collection.
Specifically, the FDD indicates that Beef O Bradys may convert past due franchisee receivables to interest-free notes to formalize repayment terms and increase the probability of collectability of amounts due from franchisees. The document also mentions that the company adopted the practical expedient under ASC 606, where a significant financing component is not considered when the customer payment for those services will be one year or less. If greater than a year, the company will evaluate whether there is a significant financing component.
While the FDD mentions that a significant financing component exists for notes receivable arrangements entered into during 2023, management has determined it to be immaterial to the consolidated financial statements. The FDD states that during 2022, there was minimal activity in the allowance for doubtful accounts as the allowance for doubtful accounts was determined to be trivial.
To gain a clear understanding of the specific amounts of franchisee receivables converted to notes in 2022, a prospective franchisee should directly ask Beef O Bradys for this information. Understanding the frequency and amounts of these conversions can provide insight into the financial stability of franchisees and the support provided by the franchisor.