What accounting method does Crave use for recognizing bad debts?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
Management considers receivables to be fully collectible. If amounts become uncollectible, they are charged to operations in the period in which that determination is made. Accounting principles generally accepted in the United States of America require that the allowance method be used to recognize bad debts; however, the effect of using the direct write-off method is not materially different from the results that would have been obtained under the allowance method. For the period ended December 31, 2024, there were no write-offs and no allowance deemed necessary.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, Crave considers its accounts receivable to be fully collectible. However, if amounts become uncollectible, Crave charges those amounts to operations in the period the determination is made.
While accounting principles generally accepted in the United States of America require the allowance method to recognize bad debts, Crave uses the direct write-off method. Crave states that the effect of using the direct write-off method is not materially different from the results that would have been obtained under the allowance method.
For the year ending December 31, 2024, there were no write-offs and no allowance deemed necessary. This means that Crave did not have any uncollectible accounts receivable that needed to be written off during that period.