Do the Crave Cookies financial statements include any discussion of the impact of economic conditions?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
expenses during the reporting period. Actual results could differ from those estimates.
Accounts Receivable
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, 2023 and 2022, there was no allowance for credit losses recorded.
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 years ended December 31, 2023 and 2022, credit loss expense related
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, the financial statements do include a discussion of the impact of economic conditions, specifically in relation to accounts receivable. The company assesses the collectability of its accounts receivable by considering historical collection data and current economic conditions. This assessment is used to determine if an allowance for credit losses is necessary.
For example, the notes to the financial statements for 2023 state that Crave Cookies provides an allowance for credit losses based on a review of outstanding receivables, historical collection information, and existing economic conditions. For the years 2023 and 2022, there was no allowance for credit losses recorded as of December 31, 2023 and 2022. However, during the year ended December 31, 2023, Crave Cookies recorded a credit loss expense of $5,000 related to doubtful accounts receivable, where collectability is not reasonably assured, while no such expense was recorded in 2022.
This indicates that Crave Cookies' management considers economic conditions when evaluating the potential for uncollectible accounts. For a prospective franchisee, this suggests that the franchisor is aware of how economic fluctuations can impact franchisees' ability to pay and is taking steps to account for this in their financial reporting. It also highlights the importance of franchisees maintaining sound financial practices to minimize the risk of uncollectible accounts, especially during economic downturns.