What amount of revenue did Apricot Lane defer at December 31, 2023?
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 revenue of $627,500 at December 31, 2023. This deferred revenue relates to franchise fees. The document also states that franchise fees totaling $207,000 were receivable at the same date.
Apricot Lane's accounting policy, as outlined in Note 1, dictates that the recognition of franchise fees as revenue is deferred until the store actually opens. This means that while Apricot Lane had already received $627,500 in franchise fees, they hadn't yet recognized it as revenue on their income statement because the corresponding stores were not yet open for business.
For a prospective franchisee, this deferred revenue policy indicates that Apricot Lane's reported revenue in any given period may not fully reflect the cash they've already collected from new franchise sales. This is a common accounting practice that provides a more accurate picture of when Apricot Lane has actually earned the revenue by fulfilling its obligations to new franchisees.