What was the allowance for doubtful accounts for Face Foundrie as of December 31, 2024?

According to Face Foundrie's 2025 Franchise Disclosure Document, the company had an allowance for doubtful accounts of $25,000 as of December 31, 2024. This allowance represents an estimate of accounts receivable that Face Foundrie may not be able to collect. There was no allowance for doubtful accounts as of December 31, 2023, and December 31, 2022. As of December 31, 2024, 2023 and 2022, the accounts receivable balance was $424,770, $96,311 and $101,020, respectively.

For a prospective Face Foundrie franchisee, the allowance for doubtful accounts is relevant because it reflects the credit risk associated with the company's accounts receivable. Accounts receivable are amounts due to Face Foundrie based on executed franchise agreements for franchise sales, royalties, and other sales transactions. The establishment of an allowance in 2024, where none existed in the two prior years, could signal changes in the collectibility of these receivables.

Face Foundrie determines the allowance for doubtful receivables by using the Current Expected Credit Losses (CECL) model. This model requires Face Foundrie to estimate and recognize expected credit losses over the life of the financial instrument. Management evaluates customer receivables, considering their financial condition, credit history, and current economic conditions.

The allowance for doubtful accounts directly impacts Face Foundrie's financial statements, reducing the net realizable value of accounts receivable. Franchisees should consider this allowance as part of their overall assessment of the company's financial health and stability. Understanding the factors that contribute to this allowance can provide insights into the potential risks associated with revenue collection from franchisees and other sources.