Does Better Blend maintain an allowance for doubtful accounts related to royalties receivable?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
Royalties receivable are reported at invoice value. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its franchisees to make required payments. Management considers the age of royalties receivable balances and general economic issues when determining the collectability of specific accounts. Based on management's assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to the allowance for doubtful accounts. Balances that remain outstanding after reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and credit to royalties receivable. The Company has not established an allowance for doubtful accounts as it is management's opinion that uncollectible accounts, if any, at December 31, 2023 were not material to the financial statements.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, Better Blend maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its franchisees to make required payments. Management considers the age of royalties receivable balances and general economic issues when determining the collectability of specific accounts.
Based on management's assessment, Better Blend provides for estimated uncollectible amounts through a charge to earnings and a credit to the allowance for doubtful accounts. Balances that remain outstanding after reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and credit to royalties receivable.
However, Better Blend had not established an allowance for doubtful accounts as of December 31, 2023, because it was management's opinion that uncollectible accounts, if any, were not material to the financial statements. This means that while Better Blend has a policy to account for potential non-payment of royalties, they did not deem it necessary to set aside any specific funds for this purpose in 2023.