How does Surestay Hotel By Best Western record a receivable?
Surestay_Hotel_By_Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
Accounts receivable, principally from Members, net, are primarily from Member, franchisee, licensee fees and services, and product sales. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of hoteliers located throughout the world comprising the Company's customer base. The Company does not require collateral within credit limits established. In those instances when a Member, franchisee, or licensee requests product in excess of the credit limit allowed by Company policy, the Company requests a letter of credit, deposit, or prepayment to secure the collection of accounts receivable. The Company performs ongoing evaluations of its hotelier receivables; non-payment can lead to cancellation of the applicable Best Western membership, license or franchise.
Source: Item 23 — Receipts (FDD pages 88–286)
What This Means (2025 FDD)
According to Surestay Hotel By Best Western's 2025 Franchise Disclosure Document, the company's accounts receivable, primarily from its members, are a result of fees and services from franchisees and licensees, as well as product sales. Surestay Hotel By Best Western manages credit risk by establishing credit limits for its hoteliers.
To mitigate potential credit risk, Surestay Hotel By Best Western does not require collateral within established credit limits. However, if a member, franchisee, or licensee requests products exceeding their credit limit, the company may ask for a letter of credit, deposit, or prepayment to secure the accounts receivable. This is a fairly standard practice to ensure payment, especially when dealing with larger orders or higher risk accounts.
Surestay Hotel By Best Western also conducts ongoing evaluations of its hotelier receivables. Non-payment can lead to cancellation of the applicable Best Western membership, license, or franchise. This provides a strong incentive for timely payments and helps Surestay Hotel By Best Western maintain a healthy accounts receivable portfolio. This active management of receivables is crucial for maintaining financial stability and minimizing losses due to bad debt.