How does Cool Binz handle uncollectible amounts related to notes receivable?

According to Cool Binz's 2025 Franchise Disclosure Document, notes receivable are issued upon the sale of a franchise or area franchise rights, in conjunction with the sale of equipment, or in some cases, to refinance a franchise's overall obligations. These notes are reported at the original issue amount plus accrued interest, less principal repaid, with interest recognized according to the specific terms of the notes. Cool Binz establishes an allowance for credit losses for amounts expected to be uncollectible over the contractual life of the notes receivable.

To determine this allowance, Cool Binz collectively evaluates notes receivable and calculates the allowance using an expected loss model. This model considers the company's actual historical loss rates, adjusted for current economic conditions and reasonable and supportable forecasts. The company considers unemployment and consumer spending data when making adjustments for these forecasts. This means that Cool Binz actively monitors economic indicators to predict potential losses on notes receivable.

Uncollectible amounts are written off against the allowance for credit losses in the period they are determined to be uncollectible, and recoveries of amounts previously written off are recognized when received. Notes are considered delinquent if the repayment terms are not met. As of December 31, 2024, $128 of notes receivable were considered past due. This detailed approach to managing notes receivable and accounting for potential losses provides transparency into Cool Binz's financial practices and risk management.