What action can Bw Premier Collection take if a hotelier does not pay their receivables?
Bw_Premier_Collection Franchise · 2025 FDDAnswer from 2025 FDD Document
Accounts receivable, principally from Members, net, are primarily from Member, franchisee, licensee fees and services, and product sales. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of hoteliers located throughout the world comprising the Company's customer base. The Company does not require collateral within credit limits established. In those instances when a Member, franchisee, or licensee requests product in excess of the credit limit allowed by Company policy, the Company requests a letter of credit, deposit, or prepayment to secure the collection of accounts receivable. The Company performs ongoing evaluations of its hotelier receivables; non-payment can lead to cancellation of the applicable Best Western membership, license or franchise.
Source: Item 23 — Receipts (FDD pages 54–203)
What This Means (2025 FDD)
According to the 2025 FDD, Bw Premier Collection addresses the risk of non-payment from hoteliers through several measures. The company performs ongoing evaluations of its hotelier receivables. If a hotelier requests product in excess of their credit limit, Bw Premier Collection may request a letter of credit, deposit, or prepayment to secure the collection of accounts receivable. Ultimately, non-payment can lead to cancellation of the applicable Best Western membership, license, or franchise.
Bw Premier Collection extends credit to hoteliers, tour operators, central bill accounts, and other third parties in the normal course of business. To evaluate the collectability of accounts receivable balances, Bw Premier Collection considers the type of relationship with the account, prior experience with accounts in each relationship type, and an evaluation of current and projected economic conditions as of the Consolidated Statements of Financial Position date.
Bw Premier Collection also records allowances for current expected credit losses based on their assessment of customers' credit risk and the collectability of accounts. This involves considering the age of each outstanding invoice and an evaluation of expected risk of credit loss based on current conditions and reasonable forecasts of future economic conditions over the life of the receivable. Credit losses for trade receivables are recorded as general and administrative expenses. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
For a prospective franchisee, this indicates that Bw Premier Collection actively manages credit risk and has mechanisms in place to mitigate potential losses from unpaid receivables. Franchisees should be aware of the credit terms and payment obligations and understand the potential consequences of non-payment, including possible cancellation of their franchise agreement.