What was the amount of revenue recognized from deferred license revenue for Benihana during the year 2020?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
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F-20
Significant changes in deferred license revenue and deferred gift card revenue for the years ended December 31, 2021 and 2020 are as follows (in thousands):
| December 31, | December 31, |
|---|
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the revenue recognized from deferred license revenue during the year 2020 was $206,000. This indicates the amount of previously deferred revenue that Benihana recognized as actual revenue in that specific year.
Deferred revenue typically arises from initial licensing fees and upfront fees related to management and license agreements. Benihana recognizes these fees on a straight-line basis over the term of the agreement. This accounting practice means that instead of recognizing the entire fee as revenue immediately, Benihana spreads the recognition over the duration of the agreement, providing a more consistent revenue stream.
For a prospective Benihana franchisee, understanding deferred revenue is crucial because it reflects how the company manages and reports its financial performance related to licensing agreements. It also provides insight into the stability and predictability of Benihana's revenue streams, which can be an important factor when evaluating the financial health and sustainability of the franchise system.