What was the contract liability for Aw as of December 31, 2024?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
| ASSETS | |||
|---|---|---|---|
| YEARS ENDED DECEMBER 31 2024 | 2023 | ||
| Assets | |||
| Cash | $ 8,494 | $ | 4,705 |
| Due from franchisee | — | 7,837 | |
| Due from related parties | 51,502 | 51,502 | |
| Total Assets | $ 59,996 | $ | 64,044 |
| Current Liabilities | |||
| Loan payable SBA | $ 532 | $ | 513 |
| Loan payable WinTrust | 10,073 | 10,073 | |
| Contract Liability | 6,875 | 8,000 | |
| Total Current Liabilities | 17,480 | 18,586 | |
| Long Term Liabilities | |||
| Loan payable |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the company's contract liability as of December 31, 2024, was $6,875. This figure represents the current portion of the contract liability. Additionally, Aw had a long-term contract liability, net of the current portion, of $10,625 at the end of 2024. Therefore, the total contract liability for Aw at the end of 2024 was the sum of these two amounts.
Contract liabilities typically arise from non-refundable franchise fees that Aw receives but has not yet earned. These fees are deferred and recognized as revenue over the life of the franchise agreement. This accounting practice complies with Financial Accounting Standards Board (FASB) standards for revenue recognition.
For a prospective Aw franchisee, understanding the franchisor's contract liabilities can provide insight into the company's financial obligations and how it manages its revenue recognition. It's important to note that these liabilities reflect Aw's obligations to provide services or fulfill agreements for which it has already received payment.