Where can I find more information about concentrations of credit risk for Engineering For Kids?
Engineering_For_Kids Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company is exposed to credit losses in the event of nonperformance by the counterparties to the Company's financial instruments. Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash deposits and accounts receivable. The Company's policy requires cash deposits to be placed with high-quality financial institutions that are FDIC or NCUA insured and to limit the amount of credit risk from any one issuer. The Company regularly evaluates the credit standing of its counterparty financial institutions. Although such cash balances may exceed the federally insured limits at certain times during the year, they are, in the opinion of management, subject to minimal risk.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to Engineering For Kids' 2025 Franchise Disclosure Document, details regarding concentrations of credit risk can be found in Note 2 of Item 22. This note discusses the nature of the organization, as well as risks and uncertainties associated with Engineering For Kids International, LLC.
Engineering For Kids is exposed to potential credit losses if the parties they have financial instruments with do not perform as expected. The company identifies cash deposits and accounts receivable as financial instruments that could subject them to concentrations of credit risk. To manage this risk, Engineering For Kids requires that cash deposits be placed in high-quality financial institutions insured by the FDIC or NCUA and regularly evaluates the credit standing of these institutions. While cash balances may, at times, exceed federally insured limits, the company's management believes the risk is minimal.
Prospective franchisees should carefully review Note 2 within Item 22 to understand how Engineering For Kids manages its credit risks. Understanding these risks and the measures Engineering For Kids takes to mitigate them can help a franchisee assess the financial stability of the franchisor. Franchisees may also want to inquire about the specific criteria used to evaluate financial institutions and the historical performance of accounts receivable to gain a clearer picture of potential credit risks.