What was the total amount of Credit Loss Expense for Gold Star in 2024?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
| Gold Star Chili, Inc. | Properties, LLC | TCWW, LLC | Eliminations | _ | Total | ||
|---|---|---|---|---|---|---|---|
| Current Assets | |||||||
| Cash | $ | 437,267 | $ 909,375 | $ 244,320 | $ - | $ | 1,590,962 |
| Accounts Receivable, Less Allowance for | |||||||
| Expected Credit Losses of $896,732 | 905,238 | 2,002,485 | 4,130 | (1,981,263) | 930,590 |
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the Accounts Receivable line item includes a deduction for "Allowance for Expected Credit Losses" as of a specific date. The document states that the allowance for expected credit losses was $896,732. This figure represents Gold Star's estimation of potential losses from customers failing to pay their outstanding balances.
This allowance directly impacts the reported value of accounts receivable on Gold Star's balance sheet. Instead of listing the total amount of money owed by customers, Gold Star reduces this amount by the expected credit losses, providing a more realistic view of what the company expects to collect. This is a standard accounting practice to account for the risk of non-payment.
For a prospective franchisee, this information indicates the level of credit risk Gold Star anticipates in its operations. While not a direct expense, the allowance for credit losses reflects potential uncollectible revenue, which could affect a franchisee's profitability. Understanding how Gold Star manages and accounts for these potential losses can help a franchisee assess the financial health and stability of the franchise system.