What was the deferred revenue for initial franchise fees for Beggars Pizza at December 31, 2021?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's revenue mainly consists of franchise fees and royalties. The Company sells individual franchisees the right to operate a Beggars Pizza location within a defined territory using the franchise brand name.
Initial franchise fees are $25,000 for a restaurant with 150 or fewer seats and $40,000 for a restaurant with more than 150 seats. The Company offers a 50 percent franchise fee discount to a franchisee that opens a second store. This fee is due and nonrefundable upon signing the franchise agreement. The initial nonrefundable franchise fees, which are collected in advance, are recognized as revenue at a point in time franchisee opens their location, or upon termination of such agreement. At the expiration of a franchise agreement, a renewal fee ranging from 10 to 33 percent of the initial franchise fee is due and recognized at a point in time when services related to the renewal agreement are completed. For the yea
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the initial franchise fees deferred totaled $25,000 at December 31, 2021. This deferred revenue represents the amount of initial franchise fees that Beggars Pizza had collected but not yet recognized as revenue as of that date.
Beggars Pizza collects initial franchise fees when a franchise agreement is signed. The initial franchise fees are $25,000 for a restaurant with 150 or fewer seats and $40,000 for a restaurant with more than 150 seats. A 50% discount is offered to franchisees opening a second store. These fees are recognized as revenue when the franchisee opens their location or if the agreement is terminated. Until that point, the revenue is 'deferred,' meaning it's held on the balance sheet as a liability representing Beggars Pizza's obligation to provide the franchise rights and related services.
For a prospective franchisee, this deferred revenue figure indicates the financial health and accounting practices of Beggars Pizza. It shows how Beggars Pizza recognizes revenue and manages its obligations to new franchisees. A significant amount of deferred revenue could suggest many new franchises are in the pipeline, which may indicate growth and future revenue for the franchisor. However, it is important to note that this deferred revenue will only be recognized once the stores open.