What generally comprises the accounts receivable for Clean Your Dirty Face?
Clean_Your_Dirty_Face Franchise · 2025 FDDAnswer from 2025 FDD Document
all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.
Accounts Receivable
Accounts receivable are carried at their estimated realizable amount and do not bear interest. Receivables generally consist of royalty revenue, which is based on a percentage of franchise monthly gross sales, and are typically collected the month subsequent to the month in which the royalties are earned.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Clean Your Dirty Face's 2025 Franchise Disclosure Document, the company's accounts receivable primarily consist of royalty revenue. This royalty revenue is calculated as a percentage of each franchise's monthly gross sales. Clean Your Dirty Face typically collects these royalty payments the month following the month in which the royalties are earned.
For a prospective franchisee, this means that a portion of their sales revenue for a given month will be owed to Clean Your Dirty Face as royalties. This amount will be reflected as an account receivable on Clean Your Dirty Face's balance sheet until the franchisee remits the payment. Franchisees should ensure they understand the royalty percentage and reporting procedures to manage their cash flow effectively and avoid late payment penalties.
Clean Your Dirty Face carries its accounts receivable at their estimated realizable amount, and these receivables do not bear interest. The company also maintains an allowance for credit losses, which is calculated on a pooled basis considering similar risk characteristics. However, the FDD states that the allowance for credit losses was $0 as of December 31, 2024 and 2023, indicating that Clean Your Dirty Face has not deemed credit losses to be material in its financial statements.