At what value does Crab N Spice report franchisee receivables?
Crab_N_Spice Franchise · 2024 FDDAnswer from 2024 FDD Document
urities of three months or less when purchased.
Franchisee Receivables
The Company's franchisee receivables primarily result from initial franchise fees, royalty fees, brand development contributions and training fees charged to franchisees. Timing of revenue recognition may be different from the timing of invoicing to customers. The Company records an accounts receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized after invoicing. The Company reports these receivables at net realizable value.
Management determines the allowance for doubtful accounts based on historical losses, current expectations, and economic conditions. On a continuing basis, management analyzes delinquent accounts receivable and, once these accounts receivable are determined to be uncollectible, they are written off through a charge against an existing allowance account. The allowance account is reviewed regularly and adjusted against earnings as appropriate. The Company determined that an allowance on outstanding franchisee receivables of $0 was necessary as of December 31, 2023, December 31, 2022, & December 31, 2021. Franchisee bad debt expense was $0 for the year ended December 31, 2023, December 31, 2022, & December 31, 2021. Franchisee amounts written off were $0 f
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 40–50)
What This Means (2024 FDD)
According to Crab N Spice's 2024 Franchise Disclosure Document, the company reports franchisee receivables at net realizable value. Franchisee receivables primarily come from initial franchise fees, royalty fees, brand development contributions, and training fees charged to franchisees.
The document states that Crab N Spice management determines the allowance for doubtful accounts based on historical losses, current expectations, and economic conditions. Delinquent accounts receivable are analyzed on a continuing basis, and once deemed uncollectible, they are written off against an existing allowance account. This allowance account is reviewed regularly and adjusted against earnings as appropriate.
For the years ending December 31, 2023, December 31, 2022, and December 31, 2021, Crab N Spice determined that an allowance on outstanding franchisee receivables of $0 was necessary. Additionally, franchisee bad debt expense and franchisee amounts written off were also $0 for those same years. This indicates that, historically, Crab N Spice has not experienced issues with collecting franchisee receivables, but this could change in the future.