What action does Zoomin Groomin take if a loss contingency is 'reasonably possible'?
Zoomin_Groomin Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company may be subject to various claims, legal actions and complaints arising in the ordinary course of business. In accounting for legal matters and other contingencies, the Company follows the guidance in ASC Topic 450 Contingencies, under which loss contingencies are accounted for based upon the likelihood of incurrence of a liability. If a loss contingency is "probable" and the amount of loss can be reasonably estimated, it is accrued. If a loss contingency is "probable" but the amount of loss cannot be reasonably estimated, disclosure is made. If a loss contingency is "reasonably possible," disclosure is made, including the potential range of loss, if determinable. Loss contingencies that are "remote" are neither accounted for nor disclosed.
Source: Item 9 — 01. Financial Statements and Exhibits. (FDD pages 68–156)
What This Means (2025 FDD)
According to Zoomin Groomin's 2025 Franchise Disclosure Document, the company follows ASC Topic 450 Contingencies when accounting for legal matters and other contingencies. If a loss contingency is considered 'reasonably possible,' Zoomin Groomin will make a disclosure. This disclosure includes the potential range of loss, if it can be determined.
This means that if Zoomin Groomin faces a potential loss that is more than remote but not probable, they will inform stakeholders about the situation. This provides transparency regarding potential financial risks the company faces.
However, if a loss contingency is 'remote,' Zoomin Groomin will neither account for it nor disclose it. If a loss contingency is 'probable' and the amount of the loss can be reasonably estimated, Zoomin Groomin will accrue it. If the loss is probable but the amount cannot be reasonably estimated, Zoomin Groomin will make a disclosure about the loss contingency.