How does Kidokinetics determine when accounts receivable are deemed uncollectible and written off?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
ccounts Receivable
Accounts receivable primarily consist of amounts from franchisees for initial franchise fees, royalty fees, and advertising fees. These receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of outstanding amounts. Management regularly evaluates individual customer receivables considering their financial condition, credit history and current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded as income when received.
As of December 31, 2023, 2022, and 2021, the Company had receivables of $446,951, $498, and $0, respectively. As of December 31, 2023, 2022, and 2021, the Company had no allowance for unco
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the company's accounts receivable primarily consist of amounts due from franchisees for initial franchise fees, royalty fees, and advertising fees. These receivables are recorded at the original invoice amount, minus any estimates for doubtful accounts. Kidokinetics's management routinely assesses individual customer receivables, taking into account their financial condition, credit history, and current economic conditions.
Kidokinetics writes off accounts receivable when they are deemed uncollectible. If any of these written-off receivables are later recovered, they are recorded as income when received. As of December 31, 2023, the company had receivables of $446,951, compared to $498 in 2022 and $0 in 2021. Notably, as of December 31, 2023, 2022, and 2021, Kidokinetics had no allowance for uncollectible accounts.
For a prospective Kidokinetics franchisee, this means that the franchisor actively manages and monitors the collection of fees and royalties. The fact that there was no allowance for uncollectible accounts in the past three years could indicate effective collection practices or a conservative approach to estimating potential losses. Franchisees should maintain open communication with Kidokinetics regarding any financial difficulties to potentially avoid their accounts being deemed uncollectible.