Within how many days of billing are franchisee-related accounts receivable due to Checkersrallys?
Checkersrallys 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 Checkersrallys's 2025 Franchise Disclosure Document, franchisee-related accounts receivable, such as royalties, rents, and franchise fees, are due within 10 days of billing. In some instances, Checkersrallys may directly draw funds from the franchisee's bank account on a predetermined day.
Checkersrallys maintains an allowance for credit losses, primarily for specific accounts where collection is not expected. They establish reserves using the specific identification method, estimating the collectible balance by evaluating the debtor's financial condition, historical experience, and the value of any pledged security interest.
Checkersrallys reports that they have traditionally experienced a high rate of collection due to the franchise agreements providing remedies in the event of a franchisee's default. These remedies include a security interest in the assets of the business when a sublease is in place or a personal guarantee from the franchisee. This suggests that Checkersrallys actively manages and mitigates the risk of non-payment from franchisees.