What was the reserve for current expected credit losses for Coffee News in 2023?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
| December 31, 2024, 2023 and 2022 | ||||
|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||
| ASSETS | ||||
| Current assets | ||||
| Cash | $ 64,135 | $ 66,796 | $ 94,422 | |
| Accounts receivable, net of reserve for current expected credit | ||||
| losses of $80,000 in 2024 and $120,000 in 2023 and 2022 | 26,049 | 38,558 | 23,979 | |
| Total current assets | 90,184 | 105,354 | 118,401 | |
| Other assets | ||||
| Investments | 84,419 | 104,477 | 102,181 | |
| Furniture and equipment, net | - | 31,865 | 38,977 | |
| Repurchased licenses | 17,500 | 17,500 | 17,500 | |
| Total other assets | 101,919 | 153,842 | 158,658 | |
| Total assets | $ 192,103 | $ 259,196 | $ 277,059 |
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to Coffee News's 2025 Franchise Disclosure Document, the reserve for current expected credit losses in 2023 was $120,000. This figure is used to offset the accounts receivable balance, providing a more realistic view of the assets Coffee News holds. The accounts receivable, net of this reserve, was $38,558 in 2023.
This reserve accounts for potential losses from franchisees who may not pay their dues. It is a standard accounting practice to estimate potential credit losses and set aside a reserve. The fact that Coffee News maintains a reserve suggests that there is some risk of non-payment from franchisees, which is not uncommon in franchising.
Prospective franchisees should consider this figure as an indicator of the financial health and stability of Coffee News. A large reserve could indicate higher risk in collecting payments from franchisees. It is important to note that the reserve is an estimate, and the actual losses may be different. Franchisees may want to inquire about the historical trends in accounts receivable and bad debt to better understand the risk involved.