When does Pearce Bespoke record accounts receivable from franchisees?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
Accounts Receivable – The Company grants credit without collateral to a majority of its franchisees and records accounts receivable at the time when a new franchise agreement is signed or the contractual criteria for billing has been satisfied. Collectability of receivables is periodically assessed, providing the basis for the allowance for credit losses accounts and related credit loss expense. Management determined no allowance for credit losses accounts was necessary as of December 31, 2023 and 2022.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the company records accounts receivable from franchisees when a new franchise agreement is signed or when the contractual criteria for billing have been met. Pearce Bespoke grants credit without requiring collateral to most of its franchisees.
Pearce Bespoke periodically assesses the collectability of receivables. This assessment forms the basis for determining the allowance for credit losses and related credit loss expenses. As of December 31, 2023, and 2022, Pearce Bespoke's management determined that no allowance for credit losses was necessary.
For a prospective franchisee, this means that Pearce Bespoke will likely record an account receivable as soon as the franchise agreement is signed, indicating that the franchisee owes Pearce Bespoke money at that point. The franchisee should inquire about the specific payment terms and conditions outlined in the franchise agreement to fully understand their obligations.