What was the bad debt expense for Precision Door Service in 2024?
Precision_Door_Service Franchise · 2025 FDDAnswer from 2025 FDD Document
3,027,260 | 3,111,215 | | Total liabilities and member's equity | $ 3,115,790 | $ 3,198,930 |
Combined Statements of Operations and Comprehensive Income ($000's)
| For the years ended December 31, | 2024 | 2023 |
|---|---|---|
| Revenues and income | ||
| Franchise service fees | $ 180,984 | 169,842 |
| Synthetic royalties and master license fees | 28,242 | 28,705 |
| Franchise sales fees | 33,680 | 36,783 |
| Sales of products and services | 140,458 | 143,807 |
| Advertising and promotional fund revenue | 47,800 | 42,404 |
| Other | 30,502 | 30,338 |
| revenue | ||
| Total revenues and income | 461,666 | 451,879 |
| Cost of Sales | ||
| Products and services | 72,612 | 68,752 |
| Gross Profit | 389,054 | 383,127 |
| Selling expense | 15,364 | 6,939 |
| General and administrative expense | 17,967 | 18,705 |
| Advertising and promotional fund expense | 49,981 | 47,365 |
| Depreciation and amortization | 95,532 | 97,290 |
| Management expenses | 47,126 | 44,075 |
| Bad debt expense | 3,714 | 2,283 |
| Net income | $ 1 |
Source: Item 21 — Financial Statements (FDD page 91)
What This Means (2025 FDD)
According to Precision Door Service's 2025 Franchise Disclosure Document, the bad debt expense for the year ending December 31, 2024, was $3,714. This expense represents the amount of uncollectible accounts receivable that Precision Door Service wrote off during that year. Bad debt expense is a normal operating expense for businesses that extend credit to their customers.
For a prospective franchisee, understanding the bad debt expense can provide insight into the credit risk associated with Precision Door Service's customer base. A higher bad debt expense might indicate a higher risk of customers not paying their bills, which could impact a franchisee's cash flow and profitability. It is important to note that this figure reflects the performance of the franchisor's company-owned operations, and an individual franchisee's experience may differ based on their local market and credit management practices.
Comparing the 2024 bad debt expense of $3,714 to the 2023 bad debt expense of $2,283, there is an increase. This increase could be due to various factors, such as changes in the economy, changes in Precision Door Service's credit policies, or an increase in sales to customers with a higher risk of default. Franchisees should inquire about the factors contributing to this change and how Precision Door Service manages and mitigates bad debt risk.
Overall, while bad debt expense is a normal part of doing business, prospective franchisees should carefully consider the implications of this expense and how it might impact their own financial performance. Understanding the trends in bad debt expense and the factors that influence it can help franchisees make informed decisions about managing credit risk in their own businesses.