What was the balance of the allowance for credit losses for Clear Pest Pros as of January 1, 2023?

According to Clear Pest Pros' 2025 Franchise Disclosure Document, the balance of the allowance for credit losses as of January 1, 2023 was $1,746. This figure relates to notes receivable. Clear Pest Pros establishes this allowance for amounts expected to be uncollectible over the contractual life of the notes receivable.

The allowance for credit losses is a contra-asset account that reduces the gross amount of notes receivable to the amount Clear Pest Pros reasonably expects to collect. This accounting practice reflects the potential risk that some franchisees may default on their payments for franchise fees, equipment, or refinanced obligations. The allowance is calculated using an expected loss model that considers historical loss rates, current economic conditions, and reasonable forecasts.

For a prospective Clear Pest Pros franchisee, this information highlights the importance of understanding the creditworthiness of other franchisees and the potential impact of economic conditions on their ability to meet their financial obligations to Clear Pest Pros. It also demonstrates that Clear Pest Pros proactively manages and accounts for potential credit losses in its financial reporting.