As of December 31, 2023, what was the amount of non-refundable franchise fees received but not yet earned by Aw?

According to Aw's 2025 Franchise Disclosure Document, as of December 31, 2023, the non-refundable franchise fees received but not yet earned were $25,500. These fees are treated as deferred revenues. The FDD also provides the corresponding figure for the previous year, 2022, which was $33,750.

This deferred revenue represents the portion of the initial franchise fees that Aw has collected but has not yet recognized as earned revenue on its income statement. This is because Aw has ongoing obligations to the franchisee over the life of the franchise agreement. As Aw fulfills these obligations, a portion of the deferred revenue will be recognized as earned revenue.

The accounting standard Topic 606 dictates that Aw records these non-refundable franchise fees, net of amounts earned based on allowable direct services, as deferred revenues. These revenues are then recognized over the life of the franchise agreement. This accounting treatment is common in the franchise industry, as it aligns revenue recognition with the delivery of services and support to franchisees over the term of their agreements.

For a prospective Aw franchisee, this deferred revenue balance indicates the franchisor's ongoing commitment to providing support and services. It also reflects the portion of the initial franchise fee that has not yet been earned by Aw, suggesting that the franchisor has a vested interest in the franchisee's success throughout the franchise term. Franchisees may want to inquire about the specific services and support that contribute to the recognition of these deferred revenues over time.