What was the amount of Best Brains' deferred franchise revenue - Non-current as of December 31, 2024?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
| December 31, 2024 | December 31, 2023 | |
|---|---|---|
| Current Liabilities | ||
| Account and credit card payable | 4,116,083 | 3,545,720 |
| Mortgages, notes, bonds payable within 1 year | 157,834 | 50,129 |
| Deferred franchise revenue - Current | 111,920 | 45,025 |
| Other current liabilities | 157,392 | 170,701 |
| Total Liabilities | 4,543,229 | 3,811,576 |
| Non-Current Liabilities | ||
| Mortgages, notes, bonds payable in 1 year or more | 300,090 | 94,311 |
| Economic injury disaster loan (EIDL) | 150,000 | 150,000 |
| Deferred franchise revenue - Non-current | 402,161 | 91,143 |
| Total Non-current Liabilities | 852,251 | 335,454 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, the deferred franchise revenue (non-current) as of December 31, 2024, was $402,161. This deferred revenue represents franchise fees that Best Brains has received in advance but has not yet recognized as earned revenue.
The deferred revenue is classified as "non-current" because it pertains to franchise agreements that extend beyond one year. Best Brains amortizes these initial franchise fees over the life of the franchise agreement, which is generally five years. This means that Best Brains recognizes a portion of the franchise fee as revenue each year for five years, rather than recognizing the entire fee upfront.
For a prospective Best Brains franchisee, this accounting practice means that the franchisor's reported revenue in any given year does not fully reflect the cash inflows from new franchise sales. It also provides insight into the financial stability and long-term revenue streams of Best Brains, as the deferred revenue indicates future revenue recognition. Monitoring the changes in deferred revenue can provide insights into the company's growth and sales performance.