As of December 31, 2023, what was the long-term contract liabilities balance for Benjamin Franklin Plumbing?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
in a business combination are accounted for in accordance with ASU 2021-08 – Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The Company accounts for the acquisition of contract assets and liabilities as if the Company had entered into the original contract at the same date and on the same terms as the seller. There
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, the contract liabilities designated as long-term were valued at $27,640 as of December 31, 2023. These liabilities are categorized under 'Other long-term liabilities' on the company's consolidated balance sheets.
Contract liabilities represent the company's obligation to provide goods or services to customers for which it has already received payment. The 'long-term' designation indicates that these obligations are expected to be fulfilled beyond the coming year. For a Benjamin Franklin Plumbing franchisee, understanding these liabilities is crucial as it reflects the financial obligations the company has to its customers for services not yet rendered.
Prospective franchisees should consider the size and nature of these liabilities as part of their due diligence. A significant increase in long-term contract liabilities could indicate strong future revenue, but it also represents a commitment to deliver those services. Franchisees may want to inquire about the specific services or agreements that constitute these liabilities to better assess the company's financial health and future obligations.