As of December 31, 2022, what was Ledgers' allowance for credit losses related to royalty receivables?

According to Ledgers' 2025 Franchise Disclosure Document, the company's management determined that there was no allowance for credit losses related to royalty receivables as of December 31, 2022. This means that Ledgers believed all royalty receivables were fully collectible at that time, and no reserves were deemed necessary to cover potential uncollectible amounts.

For a prospective franchisee, this indicates that Ledgers has historically experienced a high rate of collection on royalty payments from its franchisees. This could be due to a strong franchisee base, effective collection practices, or a combination of factors. It is important to note that this is a snapshot in time, and future economic conditions or changes in Ledgers' franchisee network could impact the collectibility of royalty receivables.

While the FDD states there was no allowance for credit losses related to royalty receivables as of December 31, 2022, 2023, and 2024, it is important for a prospective franchisee to independently verify this information during their due diligence. They should inquire about Ledgers' historical collection rates, the criteria used to determine the allowance for credit losses, and any factors that could impact future collectibility. Understanding these aspects will help the franchisee assess the financial health and stability of Ledgers and the potential risk associated with royalty payments.