As of December 31, 2023, what was the total principal amount of notes receivable for Ledgers?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
E 3 - FRANCHISE AGREEMENTS**
Franchise locations consisted of the following as of December 31, 2024:
| Units | ARA Units | |
|---|---|---|
| Units/ARA Units beginning of year | 2 | 1 |
| Units purchased/obtained | *** | 7 2 2 |
| New units opened | 1 | 8 |
| Units Sold | I.E. | |
| Units closed | (1) | |
| Units/A |
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, as of December 31, 2023, the total principal amount of notes receivable was $40,000. The notes receivable consist of financed area representative and unit franchise agreements. These promissory notes can bear interest up to 12%.
It is important to note that the 2023 financial statements have been restated. The restatement involved a prior period adjustment due to a franchise agreement that was terminated in 2023 but not properly written off at that time. This resulted in recording $219,118 in bad debt expense for the year ended December 31, 2023, and removing the $752,118 note receivable, and $533,000 deferred revenue balances at December 31, 2023.
Prospective franchisees should be aware of these restatements and adjustments, as they can significantly impact the financial picture of Ledgers. Understanding the nature of notes receivable, their interest rates, and the potential for credit losses is crucial for assessing the financial health of the franchise. Additionally, it's advisable to inquire about the criteria and processes Ledgers uses for financing franchise agreements and managing the associated risks.