How does Central Bark Doggy Day Care evaluate the collectability of trade accounts receivable?
Central_Bark_Doggy_Day_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
Trade accounts receivable represent monthly royalty and service fees collected from each franchise. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Trade receivables are typically outstanding for 30 days or less. Management evaluates the collectability of trade accounts receivable and records an allowance for credit losses representing the estimate of the expected losses that result from all possible default events over the expected life of the receivables. The Company estimates the allowance based on historical write-off experience and current relationships with customers. The allowance for credit losses as well as the provision for credit losses, write-off activity and recoveries for the years presented are not material to the financial statements. The Company does not have any significant offbalance-sheet credit exposure related to its customers.
Source: Item 1 — Franchisee shall have paid all Royalty Fees, advertising fund contributions, LAC contributions, amounts owed for purchases by Franchisee from Franchisor, or Franchisor's affiliates, and all other amounts owed to Franchisor, Franchisor's affiliates, and third-party creditors, and shall have submitted to Franchisor all required reports and statements; (FDD pages 106–233)
What This Means (2025 FDD)
According to Central Bark Doggy Day Care's 2025 Franchise Disclosure Document, the company evaluates the collectability of trade accounts receivable, which represent monthly royalty and service fees from franchisees. These receivables are recorded at the invoiced amount without bearing interest and are typically outstanding for 30 days or less.
Central Bark Doggy Day Care's management estimates potential credit losses on these receivables. This estimate involves recording an allowance for credit losses, which represents the expected losses resulting from potential default events over the life of the receivables. The company bases this allowance on historical write-off experience and current relationships with its franchisees.
The FDD states that the allowance for credit losses, the provision for credit losses, write-off activity, and recoveries for the years presented were not material to the financial statements. Additionally, Central Bark Doggy Day Care reports that it does not have any significant off-balance-sheet credit exposure related to its customers (franchisees).