Is Beyond Juicery Eatery permitted to sell receivables it has with a franchisee?
Beyond_Juicery_Eatery Franchise · 2025 FDDAnswer from 2025 FDD Document
38 franchised stores open and 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 determine
Source: Item 10 — FINANCING (FDD pages 33–34)
What This Means (2025 FDD)
According to the 2025 FDD, Beyond Juicery Eatery addresses trade accounts receivable and the allowance for expected credit losses. Accounts receivable are recorded at net invoice amounts. The company establishes an allowance for expected credit losses based on factors such as the aging of receivables, historical collection trends, and current economic conditions. They also make adjustments based on reasonable forecasts. If Beyond Juicery Eatery is aware of a franchisee's inability to meet their financial obligations, they may individually evaluate the receivable to determine the allowance for expected credit losses. Any amounts deemed uncollectible are charged against this allowance in the period the determination is made.
The FDD states that the allowance for expected credit losses on accounts receivable balances was $18,563 as of December 31, 2024. In 2023 and 2022, the company did not record an allowance for credit losses because they determined there was minimal risk based on historical losses and current and expected future conditions. They believed any such credit losses would be insignificant to their financial statements. Consequently, there were no write-offs of trade accounts receivable for the years ended December 31, 2023, and 2022.
While the FDD details how Beyond Juicery Eatery manages and accounts for potential credit losses from franchisees, it does not explicitly state whether Beyond Juicery Eatery is permitted to sell its receivables to a third party (also known as factoring). This is a common practice where a company sells its invoices to a finance company to improve cash flow. A prospective franchisee should ask Beyond Juicery Eatery directly about their policy on selling franchisee receivables to fully understand the company's financial practices and potential implications for the franchisee.