How does Crave Cookies determine when to write off delinquent receivables?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
Generally, the Company does not charge interest on past due accounts. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer. During the year ended December 31, 2024, there was no credit loss expense related to doubtful accounts receivable, where collectability was not reasonably assured.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, the company writes off delinquent receivables based on individual credit evaluations and the specific circumstances of each customer. This means that Crave Cookies assesses each situation independently to determine if the debt is unlikely to be collected.
For prospective franchisees, this indicates that Crave Cookies does not have a fixed timeline or standardized process for writing off bad debt. Instead, they take a case-by-case approach, considering factors like the customer's payment history, current financial situation, and any other relevant details. This approach provides flexibility but also requires careful judgment and documentation.
In 2024, Crave Cookies did not record any credit loss expense related to doubtful accounts receivable. However, in 2023, the company recorded $5,000 in credit loss expense. This suggests that while Crave Cookies aims to recover as much debt as possible, they acknowledge that some accounts may become uncollectible and need to be written off. Franchisees should inquire about the typical range of write-offs and the specific criteria used in these individual credit evaluations to better understand potential financial risks.