Did Crave Cookies record any bad debt expense in 2021?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
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 doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. As of December 31, 2022 and 2021, there was no allowance for doubtful accounts 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. No bad debt expense was recorded in 2022 or 2021.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, Crave Cookies did not record any bad debt expense in 2021. The FDD states that the company provides an allowance for doubtful accounts based on a review of outstanding receivables, historical collection information, and existing economic conditions. However, for the years ending December 31, 2022 and 2021, no allowance for doubtful accounts was recorded.
Furthermore, the FDD explicitly states that "No bad debt expense was recorded in 2022 or 2021." This indicates that Crave Cookies considered all accounts receivable to be fully collectible during those years and did not deem it necessary to set aside any reserves for potential losses from uncollectible debts.
For a prospective franchisee, this information suggests that Crave Cookies has been effective in managing its accounts receivable and minimizing bad debt. However, it is important to note that the absence of bad debt expense in the past does not guarantee that it will not occur in the future. Economic conditions and the creditworthiness of customers can change, potentially leading to an increase in uncollectible accounts. Franchisees should still carefully manage their own accounts receivable and implement appropriate credit policies to mitigate the risk of bad debt.
It's worth noting that in 2023, Crave Cookies did record $5,000 in credit loss expense related to doubtful accounts receivable, indicating a change in their experience with collectability. This highlights the importance of ongoing monitoring and adaptation of credit policies.