How does Zoomin Groomin determine the value of its accounts receivable, and what is the basis for estimating doubtful receivables?
Zoomin_Groomin Franchise · 2025 FDDAnswer from 2025 FDD Document
at cost when purchased and is accounted for using the specific identification method of valuation. The inventory consists of vehicles and trailers held for future resale to franchises. The Company will recognize future income from the sales as ordinary other income on the date the title is transferred. Subsequent to the year ended December 31, 2023, the Company will no longer hold title to the vehicles and thus, the vehicles will not be recorded as inventory of the Company in subsequent years. As of Dec
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 records accounts receivable for amounts due based on the terms of executed franchise agreements related to franchise sales, royalty fees, and other revenues. These receivables are carried at the original invoice amount, less any estimates made for doubtful receivables.
The estimation of doubtful receivables is based on a review of outstanding amounts. As of December 31, 2024, Zoomin Groomin had accounts receivables totaling $386,516, and the company deemed all accounts collectible at that time.
This means that Zoomin Groomin assesses the creditworthiness of its franchisees and their ability to pay outstanding invoices. If there is a risk that some franchisees may not be able to pay, Zoomin Groomin will reduce the value of its accounts receivable by an estimated amount. However, as of the end of 2024, Zoomin Groomin believed that all of its accounts receivable would be collected.