What was the total amount of Best Brains' franchise fees advance as of December 31, 2023?
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 company had $136,168 in deferred franchising fee revenue as of December 31, 2023. This amount represents franchise fees that Best Brains received in advance from franchisees.
Best Brains recognizes this revenue over a period of five years from the start of the franchisee's location. This accounting practice aligns with Financial Accounting Standards Board (FASB) standards, which dictate that initial franchise fees collected upfront are amortized over the life of the franchise agreement.
For a prospective Best Brains franchisee, this deferred revenue indicates the franchisor's financial stability and adherence to standard accounting practices. It also highlights that Best Brains does not immediately recognize all franchise fee revenue but spreads it out over the initial term of the franchise agreement.