What was the net royalty receivables amount for Beggars Pizza in 2021, after allowance for doubtful accounts?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
bank deposit accounts which at times may exceed federally insured limits. The Company 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 net collectible amounts. An allowance for doubtful accounts is established based on a specific assessment of all invoices that remain unpaid following normal customer payment periods. In addition, a general valuation allowance is established for other accounts receivable based on historical loss experience. Unpaid amounts are considered delinquent 90 days after the invoice date. All amounts deemed to be uncollect
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, royalty receivables are stated at net collectible amounts, which means they already account for potential uncollectible amounts. The allowance for doubtful accounts, which represents the amount of royalty receivables that Beggars Pizza estimates it will not be able to collect, was $10,000 as of December 31, 2021. This means that the stated royalty receivables have already been reduced by this $10,000 allowance to reflect the net collectible amount.
For a prospective Beggars Pizza franchisee, this information is relevant because it provides insight into how the franchisor manages its royalty receivables and accounts for potential losses. Knowing that Beggars Pizza has an allowance for doubtful accounts suggests that there is a risk that some franchisees may not be able to pay their royalties on time or at all. The fact that the allowance was $10,000 in 2021 gives an indication of the magnitude of these potential losses.
It's important to note that the FDD excerpt does not specify the gross royalty receivables amount before the allowance for doubtful accounts. Therefore, it is not possible to determine the exact net royalty receivables amount for 2021 from this excerpt alone. A prospective franchisee may want to inquire about the gross royalty receivables and the specific factors that contribute to the allowance for doubtful accounts to gain a better understanding of the financial health of the Beggars Pizza franchise system.