What was the allowance for credit losses related to Beggars Pizza's royalty receivables in 2022?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
any has not experienced any losses 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. Prior to 2023, the Company estimated the allowance based on its historical experience of the relationship between actual bad debts and contract revenues. As a result of the changes in the Company's credit policy during 2023, the Company changed to estimating the allowance based on an analysis of individual customers adjusted for current conditions and reasonable forecasts, taking into consideration t
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the allowance for credit losses related to royalty receivables was $10,000 as of December 31, 2022. This allowance represents Beggars Pizza's estimate of the amount of royalty receivables that may not be collectible.
For a prospective franchisee, this figure indicates the level of risk Beggars Pizza perceives in collecting royalty payments from its franchisees. A higher allowance could suggest a greater risk of franchisees not paying their royalties, while a lower allowance suggests a lower risk. However, a consistent allowance such as this one may also indicate a stable and predictable financial relationship between Beggars Pizza and its franchisees.
It's important to note that prior to 2023, Beggars Pizza estimated this allowance based on historical experience. In 2023, they changed their approach to analyze individual customer accounts, adjusting for current conditions and forecasts. This change in methodology could impact the allowance for credit losses in future years, and prospective franchisees may want to inquire about the reasons for this change and its potential effects.