What was the change in allowance for notes receivable for Golden Krust Caribbean Restaurant in 2022?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
ation and amortization Property and Equipment, Net | | $ (447,322) 229,140 | $ (392,162) 269,584 | Depreciation and amortization expense for the years ended December 31, 2022 and 2021 was $58,259 and $73,549 respectively.
NOTE 5 - NOTES RECEIVABLE FROM RELATED PARTIES:
The Company has various notes receivable with related parties, including franchisees, all included in noncurrent assets. The carrying amounts of these notes receivable are reduced by an allowance that reflects management's best estimate of the amounts that may not be collected based on various factors. The
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, the company had $127,077 in notes receivable with related parties due, net of an allowance, at the end of 2022, and $54,830 at the end of 2021. This indicates the net notes receivable increased by $72,247 during 2022. These notes receivable are with related parties, including franchisees, and are included in noncurrent assets.
The carrying amounts of these notes receivable are reduced by an allowance that reflects management's best estimate of the amounts that may not be collected. The notes bore interest at 10%, but interest is not being accrued on notes receivable that have a full allowance against them.
For a prospective franchisee, this information is relevant because it shows how Golden Krust Caribbean Restaurant manages its financing relationships with franchisees and related parties. The allowance for doubtful accounts suggests there is a risk that some notes receivable may not be fully collected. The fact that interest is not accrued on fully allowed notes indicates a conservative approach to revenue recognition, which is typical in the franchise industry.