What amount of revenue did Apricot Lane defer at December 31, 2022?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
| 200,976 | $ 17,779 |
NOTE 5 - FRANCHISE FEES RECEIVABLE AND DEFERRED FRANCHISE FEES
Franchise fees totaling $207,000 and $571,500 were receivable at December 31, 2023 and 2022 respectively. Franchise fees received as income from new store openings in 2023 and 2022 were $994,000 and $1,373,000 respectively. In accordance with the Company's accounting policy described in Note 1, recognition of such fees as revenue is deferred until the store opens. As a result, the Company
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, the company deferred $1,170,500 in revenue as of December 31, 2022. This deferred revenue relates to franchise fees received from new store openings.
Apricot Lane's accounting policy, as detailed in Note 1, dictates that franchise fee revenue is only recognized once the store actually opens. This means that while Apricot Lane may have received the franchise fees, they don't count it as earned revenue until they have completed their obligations, such as site selection, lease negotiation, marketing, franchisee training, employee training, and providing store opening assistance. This is a common practice in franchising, as it aligns revenue recognition with the delivery of services.
For a prospective Apricot Lane franchisee, this deferred revenue figure indicates the amount of cash the company has already received for future franchise openings. It reflects the pipeline of new stores that are in development but not yet generating sales. Understanding this deferred revenue can provide insight into the company's growth trajectory and financial stability. Franchisees may want to inquire about the specific timing of when this deferred revenue is expected to be recognized, as it can impact the franchisor's reported financial performance.