If Beyond Juicery Eatery discounts receivables, does this impact the franchisee's payment obligations?
Beyond_Juicery_Eatery Franchise · 2025 FDDAnswer from 2025 FDD Document
operating.
Note 2 - Significant Accounting Policies
Restricted Cash
The Company has restricted cash equal to the amount of unspent advertising funds on deposit. A total of $0, $21,982, and $945 of cash is restricted for that purpose at December 31, 2024, 2023, and 2022, respectively.
Trade Accounts Receivable
Accounts receivable are stated at net invoice amounts. An allowance for expected credit losses is established for accounts receivable based on a combination of factors, including the aging of receivables, historical collection trends, and charge-offs, and includes adjustments for current economic conditions and reasonable and supportable forecasts. When the Company is aware of a franchise or customer's inability to meet its financial obligation, the Company may individually evaluate the related receivable to determine the allowance for expected credit losses. All amounts deemed to be uncollectible are charged against the allowance for expected credit losses in the period that determination is made. The allowance for expected credit losses on accounts receivable balances was $18,563 at December 31, 2024. At December 31, 2023, and 2022, the Company did not record an allowance for credit losses, as the Company determined that there was minimal risk of credit losses based on historical losses, as well as current and expected future conditions, and that any such credit losses would be insignificant to these financial statements. Accordingly, for the years ended December 31, 2023 and 2022, there were no write-offs of trade accounts receivable.
Revenue Recognition
The Company's revenue from operations mainly consists of franchise fees, royalties, marketing fees, and technology fees. The Company sells individual franchisees the right to operate a Beyond Juicery + Eatery restaurant within a defined territory using the franchise term. The initial term of franchise agreements is typically 10 years, with an option to renew for a fee or transfer the franchise agreement to a new or existing franchisee.
Source: Item 10 — FINANCING (FDD pages 33–34)
What This Means (2025 FDD)
The 2025 FDD for Beyond Juicery Eatery discusses trade accounts receivable and revenue recognition, but it does not explicitly state whether discounting receivables impacts a franchisee's payment obligations. The FDD mentions that accounts receivable are stated at net invoice amounts and that an allowance for expected credit losses is established based on factors like aging of receivables and historical collection trends. For example, the allowance for expected credit losses on accounts receivable balances was $18,563 at December 31, 2024.
Beyond Juicery Eatery's revenue primarily comes from franchise fees, royalties, marketing fees, and technology fees. Franchisees typically pay an initial fee of $30,000, a monthly royalty fee of 6% of gross sales, and a marketing fee contribution of up to 2% of gross sales. These fees are recognized over the term of the franchise agreement as the underlying sales occur.
Since the FDD does not address the specific scenario of discounting receivables and its impact on franchisee payments, it is important for a prospective franchisee to seek clarification from Beyond Juicery Eatery regarding this matter. Understanding the franchisor's policies on receivables and potential discounts is crucial for assessing the financial obligations and risks associated with the franchise.