What is Closet Storage Concepts' policy regarding extending credit to customers and franchisees?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.
Accounts Receivable
Accounts receivable consists primarily of amounts due from franchisees for royalties and National Advertising Program revenues. The Company's policy is to extend credit to customers and franchisees that management has determined to be credit‐worthy. The company provides an allowance for credit losses equal to the estimated losses are based on a review of the current status of existing receivables. For the year ended December 31, 2024, the Company recognized $52,587, in allowance for credit losses on receivables arising from franchise royalties and advertising contributions from franchisees.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Note Receivable
The Company entered into a note receivable with a franchisee for unpaid franchise royalties, in the amount of $26,703. The balance as of December 31, 2024 was $26,703. Payments on this note commenced in April 2025, and are due in bi‐weekly variab
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, the company's policy is to extend credit to customers and franchisees that management has determined to be credit-worthy. Accounts receivable primarily consist of amounts due from franchisees for royalties and National Advertising Program revenues. Closet Storage Concepts provides an allowance for credit losses equal to the estimated losses based on a review of the current status of existing receivables.
For the year ended December 31, 2024, Closet Storage Concepts recognized $52,587 in allowance for credit losses on receivables arising from franchise royalties and advertising contributions from franchisees. Additionally, the company entered into a note receivable with a franchisee for unpaid franchise royalties in the amount of $26,703. The balance as of December 31, 2024, was $26,703.
Payments on this note commenced in April 2025 and are due in bi-weekly variable installments of approximately $250 to $700 through June 2026. Payments are expected to continue and be paid in full, and there is no interest charged on this note. This indicates that Closet Storage Concepts is willing to work with franchisees who may have difficulty paying royalties and advertising fees by offering payment plans.