What was the amount of initial franchise fees received by Afuri Ramen Dumpling in 2021?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
the financial statements were available to be issued.
NOTE 3 - FRANCHISING
The Company executes franchise agreements that set the terms of its arrangements with each franchisee. The franchise agreements typically require the franchisee to pay an initial, non-refundable fee of $45,000, which includes required training costs. The franchise agreements also require the franchisee to pay monthly royalty fees based on revenue levels. The franchisee pays marketing fees monthly to cover advertising, market research, and search engine optimization. Subject to the Company's approval and payment of a renewal fee, a franchisee may generally renew its agreement upon expiration. Direct costs of sales and servicing of franchise agreements are charged to operating expenses as incurred.
When an individual franchise is sold, the Company agrees to license the Afuri name to the franchisee, provide site selection criteria and design plans for the restaurant, assist in developing the restaurant and implementing the g
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, Afuri Ramen Dumpling's franchise agreements typically require franchisees to pay an initial, non-refundable fee of $45,000, which includes required training costs. This fee is a standard part of the franchise agreement, compensating Afuri Ramen Dumpling for granting the franchise rights, providing site selection criteria, design plans, assistance in restaurant development, grand opening advertising support, and the initial training program.
The FDD also states that Afuri Ramen Dumpling recognizes this initial franchise fee as revenue using the straight-line method over the length of the franchise agreement, which is 10 years. This means that while the franchisee pays the $45,000 upfront, Afuri Ramen Dumpling recognizes only a portion of it each year as revenue. A portion of the initial franchise fee is allocated to training revenue, which is recognized upon the franchise opening for business.
While the FDD details the standard initial franchise fee and how it's recognized, it does not specify the total amount of initial franchise fees Afuri Ramen Dumpling actually received in 2021. To get this specific figure, a prospective franchisee should directly ask Afuri Ramen Dumpling for their total initial franchise fee revenue for that year. This information would provide a clearer picture of the company's financial performance and growth.