What does Crave Cookies consider when evaluating credit risk?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
Contract receivables - accounts receivable are stated at the amount of consideration from customers of which the Company has an unconditional right to receive. The Company provides an allowance for credit losses, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. As of December 31, 2024, there was no allowance for credit losses recorded.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, the company evaluates credit risk related to accounts receivable by reviewing outstanding receivables, historical collection information, and existing economic conditions. This is a standard practice for businesses that extend credit to their customers. Crave Cookies uses these factors to determine an appropriate allowance for potential credit losses. As of December 31, 2024, the company did not record an allowance for credit losses.
For prospective Crave Cookies franchisees, this indicates that the franchisor is actively monitoring the creditworthiness of its customers and taking steps to mitigate potential losses from uncollectible accounts. This is a positive sign, as it suggests that Crave Cookies is managing its financial risks effectively.
However, it's important to note that the absence of an allowance for credit losses as of December 31, 2024, does not guarantee that such losses will not occur in the future. Economic conditions and customer payment behavior can change, potentially leading to an increase in uncollectible accounts. Franchisees should inquire about Crave Cookies' specific credit evaluation processes and the criteria used to determine the allowance for credit losses to fully understand the company's approach to managing credit risk.