What comprises the accounts and other receivables, net, for Jack In The Box?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
Accounts and other receivables, net — Our accounts and other receivables, net is primarily comprised of receivables from franchisees, tenants, credit card processors, and insurance receivables. Franchisee receivables primarily include rents, property taxes, royalties, marketing, sourcing and technology support fees associated with lease and franchise agreements, and notes from certain of our franchisees. Tenant receivables relate to subleased properties where we are on the master lease agreement. We accrue interest on notes receivable based on the contractual terms.
The Company closely monitors the financial condition of our franchisees and estimates the allowance for credit losses based on the lifetime expected loss on receivables. These estimates are based on historical collection experience with our franchisees as well as other factors, including current market conditions and events. Credit quality is monitored through the timing of payments compared to predefined aging criteria and known facts regarding the financial condition of the franchisee or customer. Account balances are charged off against the allowance after recovery efforts have ceased. The Company's allowance for doubtful accounts has not historically been material.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 93–94)
What This Means (2025 FDD)
According to Jack In The Box's 2025 Franchise Disclosure Document, the accounts and other receivables, net, primarily consist of receivables from franchisees, tenants, credit card processors, and insurance companies. For franchisees, these receivables mainly include rents, property taxes, royalties, marketing, sourcing, and technology support fees, all tied to lease and franchise agreements. The receivables also include notes from certain franchisees. Tenant receivables are related to subleased properties where Jack In The Box is on the master lease agreement. Interest is accrued on notes receivable based on the contractual terms.
Jack In The Box closely monitors the financial health of its franchisees to estimate potential credit losses on these receivables. The estimates are informed by historical collection data and current market conditions. The company monitors credit quality by tracking payment timing against predefined aging criteria and any known financial issues of franchisees or customers. Account balances are charged off against the allowance after recovery efforts have been exhausted.
The FDD states that the allowance for doubtful accounts has not historically been material for Jack In The Box. This suggests that the company has been effective in collecting its receivables and managing credit risk. For a prospective franchisee, this indicates that understanding and adhering to the payment terms outlined in the franchise and lease agreements is crucial to maintaining a good financial standing with the franchisor.