What is the reported franchise fees advance for Best Brains?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
to appropriate operating accounts at the time the expense is incurred. Expenditures determined to represent additions and improvements are capitalized if the amount is greater than $1,000.
| | | December 31, 2024 December 31, 2023 | |--------------------------
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, the deferred franchising fee revenue, representing franchise fees received in advance, was $514,081 as of December 31, 2024, and $136,168 as of December 31, 2023. These fees are amortized over a five-year period from the start of the franchisee's location.
This means that Best Brains collects franchise fees upfront from new franchisees. However, instead of recognizing all of this revenue immediately, Best Brains recognizes it gradually over five years. This accounting practice reflects the ongoing services and support that Best Brains provides to its franchisees throughout the term of the franchise agreement.
For a prospective Best Brains franchisee, this deferred revenue recognition indicates that the franchisor has a financial obligation to provide support and services over the initial five years of the franchise agreement. It also shows how Best Brains accounts for initial franchise fees, spreading the revenue recognition over the service period rather than recognizing it all at once.