What factors does Buona consider when estimating the allowance for credit losses?

According to Buona's 2025 Franchise Disclosure Document, the company monitors accounts receivable balances closely when estimating the allowance for credit losses. These estimates are based on the company's past experiences with collecting debts, as well as other elements, such as current market conditions and specific events that could impact franchisees' ability to pay.

For a prospective Buona franchisee, understanding how the company assesses credit losses is important. It provides insight into how Buona manages financial risk associated with outstanding payments from franchisees. The FDD states that the company's allowance for accounts receivable have not been material.

It is important to note that accounts receivable consist primarily of fees due principally from franchisees. If a franchisee is experiencing financial difficulties, it could impact their ability to pay fees owed to Buona, which in turn could affect the company's credit loss estimates. Franchisees should maintain open communication with Buona regarding any financial challenges they may face to ensure appropriate support and solutions can be explored.