What was the long-term portion of Exit's notes receivable in 2023?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Total notes receivable | $ 9,011,701 | $ 9,761,196 | $ 13,194,836 |
| Less: current portion | 1,409,859 | 1,056,201 | 1,355,483 |
| Long-term | $ 7,601,842 | $ 8,704,995 | $ 11,839,353 |
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the long-term portion of the company's notes receivable in 2023 was $8,704,995. This figure represents the amount of notes receivable that are not expected to be collected within the next 12 months. Notes receivable represent balances due on the sale of Canadian and U.S. regions from sub-franchisors. These notes typically bear interest between 3.00% and 10.00%, mature between 2024 and 2033, and are secured by performance contracts in the franchisor agreements.
For a prospective Exit franchisee, understanding the nature and collectibility of these notes is crucial. The franchisor's financial stability and ability to support its franchisees depend, in part, on the successful collection of these receivables. A high long-term notes receivable balance could indicate that Exit is relying on future payments to sustain its current operations.
It's important to note that Exit's management assesses the collectibility of these notes and may write down amounts deemed doubtful. However, the FDD states that there were no write-downs for notes receivable in 2023. Additionally, when Exit reacquires a region due to sub-franchisor non-performance, the uncollected notes receivable are added to the cost of regional rights on the balance sheet. This can affect the company's asset values and profitability. Franchisees should inquire about the history of regional re acquisitions and the impact on Exit's financials.