Within how many days of billing are Checkers franchisee-related accounts receivable due?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Receivables consist primarily of royalties, rents, franchise fees and notes due from franchisees and are recorded net of an allowance for credit losses. Franchisee related accounts receivable are due within 10 days of billing and in some instances we draw the funds directly from the franchisee's bank account on a predetermined day. Although the Company maintains an allowance for credit loss, the majority of the balance relates to specific accounts where collection is not expected. The reserves are established using the specific identification method based on our best estimate of the collectible balance. When determining collectability, we evaluate the debtor's financial condition, the historical experience with the debtor, and the pledged security interest value, if any. The Company has traditionally experienced a high rate of collection as the franchise agreements frequently provide remedy to the Company in the event of the franchisee's default on outstanding balances through a security interest in the assets of the business when a sublease is in place or through a personal guarantee of the franchisee.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, franchisee-related accounts receivable are due within 10 days of billing. This means that after Checkers sends an invoice to a franchisee for royalties, rents, franchise fees, or other charges, the franchisee is expected to remit payment within that timeframe.
Checkers also has the option in some instances to directly draw funds from the franchisee's bank account on a predetermined day. This indicates that Checkers may have agreements with some franchisees to automatically debit their accounts for amounts owed, providing a streamlined payment process.
Checkers monitors franchisees to ensure they comply with the terms of their franchise agreement and sublease. If a franchisee fails to comply, Checkers may place them in default status and closely monitor royalties accruing on franchisee sales to determine if collectability is reasonably assured. If Checkers determines that certain amounts are not probable of collection, they do not recognize the related royalty revenue.