What was the net royalty receivables amount for Beggars Pizza in 2022, 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 recorded at net collectible amounts. This means that Beggars Pizza accounts for potential uncollectible royalty payments from franchisees. To account for this, Beggars Pizza establishes an allowance for doubtful accounts based on assessments of unpaid invoices and historical loss experience. Unpaid amounts are considered delinquent 90 days after the invoice date. Any amounts deemed uncollectible are charged against this allowance in the period the determination is made.
As of December 31, 2022, the allowance for doubtful accounts related to royalty receivables was $10,000. This indicates that Beggars Pizza had set aside $10,000 to cover potential losses from franchisees who might not pay their royalty fees. The FDD states that the allowance for doubtful accounts was the same amount, $10,000, as of December 31, 2021.
It is important to note that the FDD only provides the allowance amount and does not specify the gross royalty receivables before the allowance. Therefore, a prospective franchisee cannot determine the total amount of outstanding royalties or the percentage of royalties deemed uncollectible from the information provided in this document. A prospective franchisee may want to inquire about the gross royalty receivables to better understand the collectibility of royalty fees.