What was the net royalty receivables amount for Beggars Pizza after allowance for credit losses in 2023?
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, royalty receivables are recorded at the net collectible amount, which means the total amount due to Beggars Pizza after subtracting an allowance for potential credit losses. This allowance accounts for the possibility that some franchisees may not pay their full royalty fees. For the year ending December 31, 2023, the allowance for credit losses was $10,000.
Beggars Pizza does not charge interest or late fees on past due amounts. Prior to 2023, Beggars Pizza estimated the allowance based on its historical experience of the relationship between actual bad debts and contract revenues. In 2023, the company changed its credit policy and began estimating the allowance based on an analysis of individual customers, considering factors like the age of past due accounts and the customer's ability to repay.
For a prospective Beggars Pizza franchisee, this means that the financial statements reflect a conservative estimate of royalty revenue, accounting for potential non-payment. The change in Beggars Pizza's credit policy in 2023 suggests a more detailed and individualized approach to assessing credit risk, which could lead to more accurate financial reporting. However, the FDD does not specify the total royalty receivables before the allowance for credit losses. Therefore, a prospective franchisee should ask Beggars Pizza for the total royalty receivables amount before the allowance to understand the gross amount of royalties due and the scale of potential credit losses.