What was the amount of notes receivable - current for Engel & Volkers in 2023?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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Melville, New York
March 6, 2025
ENGEL & VÖLKERS AMERICAS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2024 AND 2023
| 2024 | 2023 | |
|---|---|---|
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 6,231,465 | $ 5,037,368 |
| Accounts receivable |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers's 2025 Franchise Disclosure Document, the notes receivable - current for 2023 was $1,000,000. This figure is part of the company's consolidated balance sheets, reflecting the financial position of Engel & Volkers Americas, Inc. and its subsidiary. Notes receivable represent amounts due to Engel & Volkers from its direct franchisees, typically related to financing agreements for territory expansion. These notes are assessed annually based on revenue metrics, and a portion of the principal balance may be forgiven if the franchisee meets the specified criteria.
For a prospective Engel & Volkers franchisee, understanding the nature and terms of these notes receivable is crucial. The company enters into note agreements with direct franchisees to facilitate territory expansion. These agreements, such as the one for $1,000,000 entered into on January 31, 2023, play a significant role in the company's financial strategy and its support for franchisee growth. The notes are evaluated annually based on revenue metrics, and a portion of the principal balance may be forgiven if the franchisee meets the specified criteria. This arrangement can be a significant incentive for franchisees to expand their territories and increase revenue.
The notes receivable are subject to ongoing evaluation and potential adjustments. Engel & Volkers assesses the outstanding balances by evaluating each party's ability to pay, reviewing their interest payment and financial history annually, and reassessing any insolvency risk. If a failure to pay is anticipated, the company estimates an expected credit loss. This process ensures that the financial statements accurately reflect the company's financial position and potential risks associated with these notes. The allowance for doubtful accounts is also considered, with changes included in selling, general, and administrative expenses.
Overall, the notes receivable - current represent a significant asset for Engel & Volkers, reflecting its investments in franchisee growth and territory expansion. However, they also carry inherent risks, such as the potential for non-payment or the need for principal forgiveness based on revenue metrics. Prospective franchisees should carefully review the terms of these note agreements and understand the potential implications for their own financial performance and obligations.