As of December 31, 2023, what was Ledgers' allowance for credit losses related to royalty receivables?

According to Ledgers' 2025 Franchise Disclosure Document, management determined that there was no allowance for credit losses related to royalty receivables as of December 31, 2023. This indicates that Ledgers believed all royalty receivables were fully collectible at that time. This assessment is based on factors such as the length of time accounts receivable are due, previous loss history, the customer's current ability to pay, and the condition of the general economy and the industry.

For a prospective franchisee, this suggests that Ledgers has historically experienced minimal issues with collecting royalty payments from its franchisees. However, it is important to note that this is just a snapshot in time and that future economic conditions or changes in franchisee financial stability could impact the collectability of royalty receivables.

A franchisee should inquire about Ledgers' specific procedures for assessing and managing credit risk related to royalty receivables. Understanding these procedures can provide insight into how Ledgers proactively works to ensure timely payments and minimize potential losses. Additionally, it would be prudent to ask about any changes in Ledgers' approach to credit loss allowances since December 31, 2023, and the reasons for any such changes.