According to Beehive Homes' 2025 Franchise Disclosure Document, the company's accounts receivable, which primarily consist of royalties and initial franchise set-up fees, are reported at the amount that Beehive Homes' management anticipates collecting from outstanding balances. This indicates that Beehive Homes uses an estimate of collectibility to determine the stated value of its accounts receivable. This is a standard accounting practice.

Beehive Homes' management also provides for potential uncollectible amounts based on their assessment of individual accounts. This involves evaluating the current status of each account to determine the likelihood of collection. If, after reasonable collection efforts, some balances remain outstanding, they are written off. This write-off is executed through a charge to a credit loss allowance and a corresponding credit to the receivables account, effectively reducing the stated value of accounts receivable to reflect only the amounts reasonably expected to be collected.

For prospective franchisees, this accounting practice means that Beehive Homes is proactively managing and accounting for the risk of uncollectible receivables. The FDD states that the balance of the allowance for credit losses was $0, $0, and $90,000 at December 31, 2024, 2023, and 2022, respectively. The allowance for credit losses indicates the amount of receivables that Beehive Homes estimated to be uncollectible in those years. Understanding this approach can give franchisees insight into how Beehive Homes assesses financial risk and manages its assets. Franchisees may want to inquire about the historical trends in accounts receivable and credit losses to better understand the financial health and stability of the Beehive Homes franchise system.