Are Counselor Realty's accounts receivable secured or unsecured?

According to Counselor Realty's 2025 Franchise Disclosure Document, the company's accounts receivable, which consist of franchise-related fees, are unsecured. This means that Counselor Realty does not have a specific claim on any of the franchisee's assets if they fail to pay what they owe. As a result, Counselor Realty is a general creditor in relation to these receivables.

Counselor Realty charges 8% interest on past due accounts, providing an incentive for franchisees to pay on time. Accounts receivable are considered past due if not paid within the established terms. The company also maintains an allowance for credit losses, which was $1,574 as of December 31, 2024, and $3,724 as of December 31, 2023. This allowance is an estimate of the amount of accounts receivable that Counselor Realty does not expect to collect.

Counselor Realty writes off accounts receivable when they are determined to be uncollectible. This is a standard accounting practice to remove assets from the balance sheet that have no realistic prospect of being converted to cash. For a prospective franchisee, the unsecured nature of these receivables means that Counselor Realty is taking on more risk in its dealings with franchisees, which could potentially impact the franchisor's financial stability if a significant number of franchisees default on their payments.