What do receivables primarily consist of for Cd One Price Cleaners?
Cd_One_Price_Cleaners Franchise · 2025 FDDAnswer from 2025 FDD Document
Receivables – Receivables consist primarily of amounts due from franchisees for royalty payments and amounts dues from affiliated entities with the same controlling ownership as the Company. The Company does not charge interest or late fees on amounts past due. The Company estimates the allowance based on an analysis of specific franchisees, adjusted for current conditions and reasonable forecasts, taking into consideration the age of past due accounts and an assessment of the franchisee's ability to pay. The Company has not established an allowance for doubtful accounts at December 27, 2024 and December 29, 2023. Accounts deemed uncollectible are charged to expense. There were no amounts due over 90 days at December 27, 2024 or December 29, 2023.
Source: Item 22 — Contracts (FDD page 72)
What This Means (2025 FDD)
According to Cd One Price Cleaners' 2025 Franchise Disclosure Document, the company's receivables primarily consist of two components. The first is amounts due from franchisees for royalty payments. The second is amounts due from affiliated entities that share the same controlling ownership as Cd One Price Cleaners.
Notably, Cd One Price Cleaners does not charge interest or late fees on past due amounts, which is atypical compared to many franchise systems that impose such charges to encourage timely payments. The company estimates its allowance for doubtful accounts by analyzing specific franchisees, considering current conditions, and making reasonable forecasts. This involves assessing the age of past due accounts and the franchisee's ability to pay.
As of December 27, 2024, and December 29, 2023, Cd One Price Cleaners had not established an allowance for doubtful accounts, suggesting that the company believed that the receivables were fully collectible during those periods. Accounts that are deemed uncollectible are charged to expense. Furthermore, as of both December 27, 2024 and December 29, 2023, there were no amounts due for over 90 days, indicating that receivables were generally current.
For a prospective franchisee, this information provides insight into the financial relationships between Cd One Price Cleaners and its franchisees, as well as its affiliated entities. Understanding the nature of receivables and the company's approach to managing them can help a franchisee assess the financial stability and practices of the franchisor.