What was the deferred license revenue for Benihana as of December 31, 2023?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 22: CONTRACTS]
| December 31, | December 31, | |
|---|---|---|
| 2023 | 2022 | |
| Deferred license revenue (1) | 218 | 297 |
| Deferred gift card revenue (2) | 1,716 | 1,680 |
| Advanced party deposits (2) | 361 | 435 |
| Konavore rewards program (3) | 177 | 163 |
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the deferred license revenue as of December 31, 2023, was $218,000. This figure represents revenue that Benihana has received but not yet recognized as earned, as the related services or obligations are still outstanding. It is common practice for franchise companies to defer revenue in instances where they have received payment for services or products that will be delivered in the future.
Deferred revenue is a liability on Benihana's balance sheet because it represents an obligation to provide future services or products. As Benihana fulfills these obligations, the deferred revenue is recognized as actual revenue on the income statement. For instance, the revenue recognized from deferred license revenue for the year 2023 was $79,000.
For a prospective Benihana franchisee, understanding deferred revenue is important because it provides insight into the company's financial health and its ability to meet future obligations. A significant amount of deferred revenue can indicate strong future revenue streams, but it also means Benihana has a responsibility to deliver the promised services or products. Monitoring these figures can help a franchisee assess the stability and reliability of Benihana's revenue recognition practices.