What was the allowance for doubtful accounts receivables for Carbones Pizzeria?

According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the allowance for credit losses for accounts receivable amounted to $109,133 for the year ended October 31, 2023. For the year ended October 31, 2024, the allowance for credit losses for accounts receivable amounted to $175,595. These figures represent the company's best estimate of potential credit losses within their existing accounts receivable.

Carbones Pizzeria reviews its allowance for expected credit losses periodically, basing its determination on historical experience and analysis of past due balances, considering current conditions and reasonable forecasts. If management believes a receivable is unlikely to be recovered, it is charged off against this allowance. This process reflects an effort to account for potential uncollectible revenue from franchisees, which primarily comes from royalty and advertising fees.

For a prospective franchisee, understanding these figures is crucial as it provides insight into the financial health and risk management practices of Carbones Pizzeria. The allowance for credit losses indicates the potential for franchisees to fall behind on payments, and the amounts suggest the scale of these potential losses. Franchisees should inquire about the specific factors that contribute to these credit losses and the measures Carbones Pizzeria takes to mitigate them, such as interest charges on late payments (up to 12% annually) and close scrutiny of overdue accounts.