At what value does Bombs Away report franchisee receivables?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
maturities of three months or less when purchased.
Franchisee Receivables
The Company's franchisee receivables primarily result from initial franchise fees, royalty fees, brand development contributions and training fees charged to franchisees. Timing of revenue recognition may be different from the timing of invoicing to customers. The Company records an accounts receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized after invoicing. The Company reports these receivables at net realizable value.
Management determines the allowance for doubtful accounts based on historical losses, current expectations, and economic conditions. On a continuing basis, management analyzes delinquent accounts receivable and, once these accounts receivable are determined to be uncollectible, they are written off through a charge against an existing allowance account. The allowance account is reviewed regularly and adjusted against earnings as appropriate. The Company determined that an allowance on outstanding franchisee receivables of $0 was necessary as of December 31, 2023. Franchisee bad debt expense was $0 for the year ended December 31, 20
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the company records franchisee receivables at net realizable value. Franchisee receivables primarily come from initial franchise fees, royalty fees, brand development contributions, and training fees charged to franchisees. The timing of revenue recognition may differ from the timing of invoicing customers. Bombs Away records an accounts receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized after invoicing.
Management determines the allowance for doubtful accounts based on historical losses, current expectations, and economic conditions. Delinquent accounts receivable are analyzed, and once deemed uncollectible, they are written off against an existing allowance account. The allowance account is reviewed regularly and adjusted against earnings as appropriate.
As of December 31, 2023, Bombs Away determined that an allowance on outstanding franchisee receivables of $0 was necessary. Additionally, franchisee bad debt expense was $0, and franchisee amounts written off were $0 for the year ended December 31, 2023. This indicates that Bombs Away did not have any uncollectible franchisee receivables requiring an allowance or write-off during that period.