What was the allowance on outstanding franchisee receivables for Chocolate Bash as of December 31, 2022?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
Company reports these receivables at net realizable value.
Management determines the allowance for doubtful accounts based on historical losses, current expectations, and economic conditions. On a continuing basis, management analyzes delinquent accounts receivable and, once these accounts receivable are determined to be uncollectible, they are written off through a charge against an existing allowance account. The allowance account is reviewed regularly and adjusted against earnings as appropriate. The Company determined that an allowance on outstanding franchisee receivables of $0 was necessary as of December 31, 2023, December 31, 2022, & December 31, 2021. Franchisee bad debt expense was $0 for the year ended December 31, 2023, December 31, 2022, & December 31, 2021. Franchisee amounts written off were $0 for the year ende
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 38)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, the company determined that an allowance on outstanding franchisee receivables of $0 was necessary as of December 31, 2022. This means that Chocolate Bash did not consider any of the franchisee receivables to be uncollectible as of that date.
This determination is based on Chocolate Bash management's assessment of historical losses, current expectations, and economic conditions. They analyze delinquent accounts receivable and write them off against an existing allowance account when deemed uncollectible. The allowance account is reviewed and adjusted against earnings as needed.
For a prospective Chocolate Bash franchisee, this indicates that the franchisor has not historically had issues with franchisees failing to pay their dues. It is important to note that this is just a snapshot in time, and future economic conditions or changes in franchisee performance could impact the allowance for doubtful accounts.
It's worth noting that the franchisee bad debt expense and franchisee amounts written off were also $0 for the year ended December 31, 2022. This further reinforces the idea that Chocolate Bash has not experienced issues with franchisees defaulting on their payments.