What accounting standard did Beggars Pizza adopt regarding credit losses?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
sses in such accounts and believes it is not exposed to any significant credit risk on cash deposits.
Royalty Receivables – Royalty receivables are stated at the net collectible amount reduced by an allowance for credit losses. The Company does not charge interest or late fees on amounts past due. The Company estimates the allowance based on an analysis of individual customers adjusted for current conditions and reasonable forecasts, taking into consideration the age of past due accounts and an assessment of the
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the company states royalty receivables at the net collectible amount, reducing it by an allowance for credit losses. Beggars Pizza does not charge interest or late fees on past due amounts.
In 2023, Beggars Pizza changed its method for estimating this allowance. Before 2023, the company based its estimates on historical experience, specifically the relationship between actual bad debts and contract revenues. However, in 2023, Beggars Pizza shifted to an analysis of individual customers, adjusting for current conditions and reasonable forecasts. This analysis considers the age of past due accounts and assesses the customer's ability to repay.
The allowance for credit losses remained consistent at $10,000 as of December 31, 2024 and 2023. This indicates that despite the change in estimation method, the company's assessment of potential credit losses has not significantly changed during those years. This approach to accounting for credit losses is important for prospective franchisees to understand, as it reflects how Beggars Pizza manages and anticipates potential non-payment of royalties.