What was the amount of recoveries related to the allowance for credit losses for Hardees in 2023?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
| Allowance for credit losses, beginning of year | $ | 1,550 | $ | 2,734 |
|---|---|---|---|---|
| Provision | 1,316 | 799 | ||
| Recoveries | (540) | (1,099) | ||
| Charge-offs | (433) | (884) | ||
| Allowance for credit losses, end of year | $ | 1,893 | $ | 1,550 |
| Allowance for credit losses, beginning of year | $ | 2,033 | $ | 3,413 |
|---|---|---|---|---|
| Provision | 2,133 | 1,270 | ||
| Recoveries | (894) | (1,701) | ||
| Charge-offs. | (897) | (949) | ||
| Allowance for credit losses, end of year | $ | 2,375 | $ | 2,033 |
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees' 2025 Franchise Disclosure Document, there are two different figures for recoveries related to the allowance for credit losses in 2023, depending on which balance sheet is being referenced. One table shows recoveries of $(1,099) in fiscal year 2023. Another table shows recoveries of $(1,701) for the same period.
These figures represent the amounts that Hardees was able to recover from previously written-off credit losses. Credit losses typically arise from franchisees' inability to pay royalties, advertising fees, or rent. Recoveries reduce the overall allowance for credit losses, reflecting positively on Hardees' financial statements.
The discrepancy between the two figures may be due to different accounting methods or the inclusion of different entities in each table. A prospective franchisee should seek clarification from Hardees regarding the specific composition of each balance sheet and the reasons for the differing recovery amounts. Understanding these figures is crucial for assessing Hardees' financial health and its ability to manage credit risks associated with its franchisees.