Does Churchs Chicken require collateral from franchisees?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
ed balance sheets based upon the expected date of cash distribution.
Accounts Receivable, Net
Accounts receivable, net consist primarily of amounts due from franchisees related to royalties, rents, and various miscellaneous items and are generally due within 14 days following each week's sales pursuant to franchise agreements. Receivables that exceed the payment terms extended by the Company are considered delinquent. The allowance for doubtful accounts is calculated based on historical experience, management's judgement regarding the Company's ability to collect, as well as the age of the accounts receivable, current market conditions and reasonable forecasts.
At December 31, 2023 and December 25, 2022, accounts receivable that were presented on the consolidated balance sheets were net of allowances for doubtful accounts of $1.1 million and $1.3 million, respectively.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 35–43)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, Churchs Chicken does not require collateral from its franchisees. However, Churchs Chicken does have minimum financial criteria that new franchisees must meet to be approved.
Accounts receivable, consisting of royalties, rents, and miscellaneous items due from franchisees, are generally due within 14 days following each week's sales. Receivables exceeding these payment terms are considered delinquent. The allowance for doubtful accounts, which reflects the estimated amount of receivables that may not be collected, was $1.2 million as of December 29, 2024, and $1.1 million as of December 31, 2023.
This policy of not requiring collateral could be seen as a benefit for franchisees, reducing the initial burden and risk associated with starting a franchise. However, the minimum financial criteria for new franchisees suggests that Churchs Chicken assesses the financial stability of potential franchisees through other means. Prospective franchisees should inquire about these specific financial criteria to ensure they meet the requirements for approval.