What was the accounts receivable for Carbones Pizzeria as of January 1, 2023?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
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Cash and Cash Equivalents
The Company holds cash and cash equivalents at times may exceed federal insurance limits; however, the Company does not anticipate any losses related to this balance.
The Company considers all highly liquid debt instruments purchased with original maturities of three months or less to be cash equivalents.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable for royalty fees from franchisees are due on or before the first day of each week for the sales during the preceding week and accounts receivable for advertising fee royalties from franchisees are due on or before Tuesday of each week for the sales during the preceding week. All receivables not received on time receive additional scrutiny from management and may be charged interest at rates up to 12% annually.
As of January 1, 2023, accounts receivable was $232,832.
In June 2016, the FASB issued guidance (FASB ASC 326) which changed how entities measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income. The most significant change in this standard is a shift from the incurred loss model to the expected loss model. Under the standard, disclosures are required to provide users of the financial statements with useful information in analyzing an entity's exposure to credit risk and the measurement of credit losses. Financial assets held by the Company that are subject to the guidance in FASB ASC 326 are trade accounts receivable. The Company adopted the standard effective January 1, 2023. The impact of the adoption was not considered material to the financial statements and primarily resulted in enhanced disclosures only.
The Company's allowance for expected credit losses, is Management's best estimate of the amount of probable credit losses in its existing accounts receivable. The Company reviews its allowance for expected credit losses periodically. Management determines an allowance based on historical experience and then analyzes individual past due balances for collectability based on current conditions and reasonable and supportable forecasts.
In addition, if Management believe
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the accounts receivable as of January 1, 2023, was $232,832. Accounts receivable primarily consists of royalty and advertising fees due from franchisees. Royalty fees are due on or before the first day of each week for the preceding week's sales, while advertising fees are due on or before Tuesday of each week for the prior week's sales.
Carbones Pizzeria scrutinizes receivables not received on time and may charge interest at rates up to 12% annually. The company also maintains an allowance for expected credit losses, which is management's best estimate of potential credit losses in its existing accounts receivable. For the year ending October 31, 2023, the allowance for credit losses was $109,133.
In June 2016, the FASB issued guidance (FASB ASC 326) which changed how entities measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income. The most significant change in this standard is a shift from the incurred loss model to the expected loss model. The company adopted the standard effective January 1, 2023. The impact of the adoption was not considered material to the financial statements and primarily resulted in enhanced disclosures only.
Prospective franchisees should be aware of these credit policies and the potential for interest charges on late payments. Understanding the accounts receivable management practices of Carbones Pizzeria can help franchisees manage their own finances and maintain a good relationship with the franchisor.