What do accounts receivable consist of for Counselor Realty?

According to Counselor Realty's 2025 Franchise Disclosure Document, the company's accounts receivable primarily consist of franchise-related fees. These receivables are unsecured, meaning they are not backed by any specific collateral. Counselor Realty charges an 8% interest on accounts that are past due, incentivizing timely payments from franchisees. Accounts receivable are considered past due if they are not paid within the established terms.

Counselor Realty has a process for dealing with uncollectible accounts. When an account is determined to be uncollectible, it is written off, meaning it is removed from the company's assets. Additionally, Counselor Realty maintains an allowance for credit losses, which is an estimate of the amount of accounts receivable that may not be collected. As of December 31, 2024, the allowance for credit losses was $1,574, and as of December 31, 2023, it was $3,724.

For a prospective Counselor Realty franchisee, this information indicates the importance of understanding the payment terms for franchise fees and the potential consequences of late payments. The interest charged on past due accounts could add to the financial burden of a franchisee experiencing cash flow issues. The allowance for credit losses suggests that Counselor Realty anticipates some level of uncollectible accounts, which is a normal business practice. However, franchisees should aim to maintain good standing by paying their fees on time to avoid interest charges and potential collection efforts.