What was the deferred franchise revenue (long term) for Best Brains as of December 31, 2022?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
| Particulars | Schedule No. | As at December 31, 2023 | As at December 31, 2022 |
|---|---|---|---|
| ASSETS | |||
| Current Assets Cash & cash equivalents | 1 | 262,049.67 | 154,275.10 |
| Inventory | _ | 417,347.00 | 289,840.00 |
| Trade Receivables | 2 | 2,038,407.38 | 1,549,975.79 |
| Other Current Assets Total Currrent Assets | 3 | 255,726.78 2,973,530.83 | 225,576.84 2,219,667.73 |
| Property and Equipment ,net of accumulated depreciation | 4 | 290,790.28 | 268,207.05 |
| Other Assets | 5 | 1,076,049.46 | 958,557.46 |
| Total Assets | 4,340,370.57 | 3,446,432.24 | |
| Current liabilities Accounts Payable Other Current Liabilities Deferred Franchise revenue-current Total Current Liabilities | 6 | 3,444,214.53 276,415.25 45,025.00 3,765,654.78 | 2,654,584.46 80,489.91 65,939.00 2,801,013.37 |
| Long term liabilities | 7 | ||
| Loans & Advances | • | 144,439.99 | 140,568.45 |
| Mortgages ,notes , bonds payable in 1 year or m | iore | 150,000.00 | 150,000.00 |
| Deferred Franchise revenue-long term Total Long Term Liabilities | 91,143.01 385,583.00 | 96,212.40 386,780.85 |
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 (long term) as of December 31, 2022, was $96,212.40. This figure represents franchise fees that Best Brains has received but not yet recognized as earned revenue.
Deferred revenue typically arises when Best Brains collects initial franchise fees upfront but recognizes the revenue over the term of the franchise agreement. In Best Brains' case, this revenue is amortized over five years from the start of the franchisee's location. This accounting practice aligns with revenue recognition standards, ensuring that revenue is recognized when the service is provided, rather than when the payment is received.
For a prospective Best Brains franchisee, understanding deferred revenue is crucial because it reflects the financial health and stability of the franchisor. A consistent deferred revenue stream indicates a steady influx of new franchise agreements and initial fees. However, it's also important to note that this revenue is recognized over time, meaning Best Brains' reported revenue in a given period may not fully reflect the total cash received from franchise fees. Reviewing the trend of deferred revenue alongside actual revenue can provide a more comprehensive view of Best Brains' financial performance.