What was the net amount of receivables from franchisees for Burros Fries as of January 1, 2021?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Receivables
Receivables (less the allowance for doubtful accounts) are recorded at net realizable value. The amounts of receivables reported in the financial statements approximates fair value. The receivable represents the Company's unconditional right to receive consideration arising from their performance under contracts with franchisees. Management considers the probability of collection of receivables, taking into account specific circumstances of franchisees as well as general economic factors, when determining whether an allowance for doubtful accounts. Management considers all receivables to be collectible at December 31, 2021, therefore the allowance for doubtful accounts is zero.
Franchise fees receivable are the result of short-term financing of franchise fees due upon signing the franchise agreement. Net receivables from franchisees were $17,500 at January 1, 2021 and $8,750 at December 31, 2021.
Royalties receivable from franchisees we
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries' 2024 Franchise Disclosure Document, the net receivables from franchisees were $17,500 as of January 1, 2021. These receivables are a result of short-term financing of franchise fees due upon signing the franchise agreement.
Receivables are recorded at net realizable value, less the allowance for doubtful accounts. The amounts reported in the financial statements approximate fair value, representing Burros Fries' unconditional right to receive consideration from franchisee contracts. Management assesses the probability of collection, considering franchisee circumstances and economic factors, to determine the allowance for doubtful accounts.
For the period ending December 31, 2021, management considered all receivables to be collectible, resulting in a zero allowance for doubtful accounts. In addition to the franchise fees receivable, royalties receivable from franchisees were $5,570 at January 1, 2021.