How does Bombs Away handle delinquent franchisee accounts receivable?

According to Bombs Away's 2024 Franchise Disclosure Document, the company maintains an allowance for doubtful accounts, which is an estimate of the amount of accounts receivable that may not be collected. Management determines this allowance based on historical losses, current expectations, and economic conditions. This is a standard accounting practice to account for potential losses from uncollectible accounts.

On a continuing basis, Bombs Away's management analyzes delinquent accounts receivable. When these accounts are determined to be uncollectible, they are written off through a charge against the existing allowance account. The allowance account is reviewed regularly and adjusted against earnings as appropriate. This process ensures that the company's financial statements accurately reflect the value of its accounts receivable.

As of December 31, 2023, Bombs Away determined that an allowance on outstanding franchisee receivables of $0 was necessary. Additionally, the franchisee bad debt expense was $0, and franchisee amounts written off were also $0 for the year ended December 31, 2023. This indicates that, at that time, Bombs Away did not experience any significant issues with franchisees failing to pay their dues. However, this could change in the future, and the company has a system in place to deal with such situations.