For Chem Dry, what was the total gross amount of notes receivable in 2022?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
| franchisees, due in monthly payments, with imputed | |||
|---|---|---|---|
| interest between 6.5 and 10.0 percent, collateralized | |||
| by the equipment | 20 | 41 | 32 |
| Total gross notes receivable | 3,090 | 5,519 | 10,366 |
| Less allowance for credit losses | (1,115) | (1,112) | (2,219) |
| Less current portion | 1,027 | 1,972 | 4,584 |
| Long-term portion | $948 $ | 2,435 $ | 3,563 |
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the total gross notes receivable in 2022 was $5,519 (thousands omitted). This figure represents the total amount of money owed to Chem Dry by its franchisees through notes receivable. These notes are typically due in monthly payments and include imputed interest ranging from 6.5% to 10.0%, with the equipment acting as collateral.
For a prospective Chem Dry franchisee, understanding the notes receivable is crucial because it reflects the financial arrangements Chem Dry has with its existing franchisees. A high number could indicate that Chem Dry is actively involved in financing franchisees, which might be a positive sign of support. However, it also carries risk, as some franchisees may default on their payments.
The document also mentions an allowance for credit losses, which was $(1,112) in 2022. This allowance is Chem Dry's estimate of the amount of notes receivable that may not be collected. The net notes receivable amount, after deducting the allowance for credit losses and the current portion, was $2,435 in 2022. This gives a clearer picture of the actual value Chem Dry expects to realize from these notes.
Prospective franchisees should consider these figures in the context of Chem Dry's overall financial health and business model. It's important to investigate the terms of these notes, the creditworthiness of the franchisees, and Chem Dry's historical collection rates to assess the potential risks and rewards associated with these financial arrangements.