How does Boulder Designs record franchise fees receivable?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
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See accompanying notes to financial statements.
Notes to Financial Statements
December 31, 2024, 2023 and 2022
(1) Summary of Significant Accounting Policies
(a) Description of Business
Boulder Designs Franchising, LLC (the "Company"), a company organized in the state of Texas in September 2017, operates as a franchisor of the Boulder Designs franchise concept in the United States of America. The Company has approximately 110 franchised outlets.
(b) Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equiv
Source: Item 23 — RECEIPT (FDD pages 50–217)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, franchise fees receivable are recorded at the invoiced amount and do not bear interest. Boulder Designs estimates potential credit losses in its existing receivables and reviews this allowance monthly.
Specifically, the company reviews balances past due over 90 days and over a specified amount individually to determine collectability. After exhausting all collection methods and determining that recovery is unlikely, account balances are charged off against the allowance.
For the year 2023, the opening balance for franchise fees receivable was $100,635. This accounting practice is fairly standard, as it ensures that Boulder Designs accurately reflects the expected value of its outstanding franchise fees and accounts for potential losses due to uncollectible amounts.
As a prospective franchisee, understanding this accounting policy is important because it provides insight into how Boulder Designs manages its financial assets and deals with potential non-payment from franchisees. It also highlights the importance of franchisees meeting their financial obligations to maintain a healthy relationship with Boulder Designs.