What was the amount of deferred non-refundable franchise fees for Baya Bar in 2022?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
| Deferred Non-refundable Franchise Fees: | ||
|---|---|---|
| Balance Beginning of year | $ 143,625 | $ 18,500 |
| Deferral of non-refundable franchise fees | 45,000 | 140,000 |
| Recognition of non-refundable franchise fees | (18,375) | (14,875) |
| Balance at end of year | $ 170,250 | $ 143,625 |
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the balance of deferred non-refundable franchise fees at the end of 2022 was $143,625. This figure represents the amount of initial franchise fees that Baya Bar had collected but not yet recognized as revenue as of December 31, 2022. These fees are deferred because Baya Bar has not yet fulfilled all of its obligations to the franchisees in exchange for the fees.
The deferred revenue stems from initial franchise fees, which are allocated to performance obligations distinct from territory rights and intellectual property. Baya Bar recognizes revenue from these initial fees when it has satisfied its performance obligations, meaning it has transferred control of the goods or services to the franchisee. Until those obligations are met, the unearned portion remains as deferred revenue.
For a prospective Baya Bar franchisee, this deferred revenue balance indicates the financial health and accounting practices of the franchisor. It reflects how Baya Bar recognizes revenue over time as it fulfills its obligations to new franchisees. Reviewing these figures over several years, as presented in the table, can provide insights into the stability and growth of the franchise system.