Does Exit obtain collateral or other security to support accounts receivable from its customers?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's financial instruments include cash, accounts receivable, notes receivable, loans receivable, advances to related parties, bank overdrafts, accounts payable and accrued liabilities, advances from related parties, notes payable and mortgage payable.
Fair Value:
The carrying amounts for cash, accounts receivable, accounts payable and accrued liabilities on the balance sheet approximates their fair value because of the short-term maturities of these items.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
Based on the 2025 FDD, it is not clear whether Exit obtains collateral or other security to support accounts receivable from its customers. While the FDD mentions accounts receivable in the context of financial instruments, it does not specify whether Exit secures these receivables with collateral.. Note 12 in the FDD mentions that the carrying amounts for accounts receivable approximate their fair value because of the short-term maturities of these items. This suggests that Exit may not require collateral due to the quick turnover of receivables. However, this is not explicitly stated.
The FDD does discuss various aspects of Exit's financial operations, including revenue recognition, related party transactions, and the administration of advertising and other funds. It also outlines the responsibilities and remuneration of sales representatives, as well as the terms and conditions of franchise agreements. However, none of these sections provide specific information about Exit's policies regarding collateral for accounts receivable.
To fully understand Exit's practices regarding accounts receivable and collateral, prospective franchisees should directly inquire with Exit about their specific policies and procedures. This will help them assess the financial risks and obligations associated with operating an Exit franchise.