Does Pearce Bespoke require collateral from franchisees to whom it grants credit?
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 grants credit without requiring collateral from most franchisees. Pearce Bespoke records accounts receivable when a new franchise agreement is signed or when the contractual billing criteria are met.
Pearce Bespoke periodically assesses the collectability of receivables to determine if an allowance for credit losses is necessary. As of December 31, 2023, and 2022, the company determined that no allowance for credit losses was required. This indicates that Pearce Bespoke has not experienced significant issues with franchisees failing to pay their debts.
For a prospective franchisee, this policy could mean easier access to credit from Pearce Bespoke, as no collateral is required. However, it is important to note that this is for 'a majority of its franchisees,' implying that in some cases, Pearce Bespoke may require collateral. A prospective franchisee should inquire about the specific circumstances under which Pearce Bespoke might require collateral, and what form that collateral might take.