As of December 31, 2024, what was Ledgers' allowance for credit losses related to royalty receivables?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
Royalty receivables are stated at the amount management expects to collect from balances outstanding at year-end. The Company estimates its allowance for credit losses by considering a number of factors, including the length of time accounts receivable are due, previous loss history, the customer's current ability to pay its obligation and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited against credit loss expense. Management has determined their is no allowance for credit losses related to royalty receivables as of December 31, 2024, 2023, and 2022.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
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, 2024. This means that Ledgers believed all royalty receivables were fully collectible as of that date.
This assessment is based on several factors that Ledgers considers. These factors include the length of time accounts receivable are due, previous loss history, the customer's current ability to pay its obligation, and the condition of the general economy and the industry as a whole. Ledgers writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited against credit loss expense.
For a prospective franchisee, this indicates that Ledgers has confidence in the ability of its franchisees to pay their royalty obligations. However, it is important to note that this is just a snapshot in time and that the allowance for credit losses could change in the future if Ledgers' assessment of its franchisees' ability to pay changes.