What factors limit the concentration of credit risk with respect to Bonchon's accounts receivable?

According to Bonchon's 2025 Franchise Disclosure Document, the concentration of credit risk regarding accounts receivable is limited due to two main factors. First, Bonchon has a large number of franchisees, which diversifies the customer base. Second, these franchisees are geographically dispersed, further reducing the risk that a single economic event could negatively impact a large portion of them simultaneously.

Bonchon also provides an allowance for credit losses. This allowance is equal to the estimated collection losses. These estimates are based on the company's past experiences with collections, along with a review of current market conditions. This allowance is a way for Bonchon to account for potential losses from franchisees who may not be able to make their required payments.

At the end of 2024, the allowance for credit losses was $14,355. There was no allowance for credit losses at the end of 2023. In 2022, the allowance for credit losses amounted to $17,940. This indicates that Bonchon actively monitors and adjusts its allowance for credit losses based on its historical collection experience and current economic conditions to mitigate potential risks associated with accounts receivable.