What was the balance of deferred non-refundable franchise fees at the end of 2023 for Baya Bar?
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 2023 was $170,250. This figure represents the amount of initial franchise fees that Baya Bar has collected but not yet recognized as revenue because the company has not yet fulfilled its obligations to the franchisee. These obligations typically include services like site selection assistance, training, and providing initial supplies.
The deferred revenue balance can fluctuate due to several factors. Deferral of non-refundable franchise fees increased by $45,000 during the year. Recognition of non-refundable franchise fees decreased the balance by $18,375. These changes reflect the timing of when Baya Bar collects franchise fees versus when they provide the services associated with those fees.
For a prospective Baya Bar franchisee, this deferred revenue balance provides insight into the company's financial health and its revenue recognition practices. A growing deferred revenue balance could indicate strong franchise sales, while a declining balance might suggest fewer new franchise agreements or faster fulfillment of obligations. It is important to note that these fees are non-refundable, meaning that under most circumstances, the franchisee will not receive this money back even if they terminate the agreement.