How does the Gokhale Method handle recoveries made from accounts previously written off?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
Accounts receivable is primarily comprised of net royalty receivables from franchise, teachers, or class fees collected by GME.
The Company utilizes the allowance method of accounting for doubtful accounts. The allowance is based on management's review of all past due accounts. As of December 31, 2022, management believes that all receivables are collectable after year end.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, Gokhale Method utilizes the allowance method for doubtful accounts. This means that the company estimates and sets aside an allowance for accounts receivable that may not be fully collectible. The allowance is based on management's review of all past due accounts.
As of December 31, 2022, Gokhale Method's management believed that all receivables were collectible after year end. This indicates that while the company does account for the possibility of doubtful accounts, they did not have any concerns about the collectibility of their receivables at that time.
The FDD does not specify the exact procedures Gokhale Method would use if they recovered funds from accounts that had previously been written off. Typically, if a company recovers an amount from an account that was previously written off, it would reverse the write-off and recognize the recovered amount as income. Since the FDD does not provide specific details on this, it is advisable for a prospective franchisee to seek clarification from Gokhale Method regarding their specific policy on the recovery of accounts previously written off.