How does Better Blend report 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, royalties receivable are reported at invoice value. Better Blend maintains an allowance for doubtful accounts to cover estimated losses from franchisees who may not be able to make required payments.
When determining the collectability of specific accounts, Better Blend's management considers the age of the royalties receivable balances and general economic conditions. Based on this assessment, Better Blend provides for estimated uncollectible amounts by charging earnings and crediting 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 a credit to royalties receivable.
As of December 31, 2023, Better Blend had not established an allowance for doubtful accounts, because management believed that any uncollectible accounts were not material to the financial statements. For a prospective franchisee, this indicates that Better Blend has been experiencing timely royalty payments from its franchisees.