What was the change in deferred revenue for Better Blend in the year ended December 31, 2023?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
proximately $50,000 for the years ended December 31, 2023.
NOTE 2 - DEFERRED REVENUE
Deferred revenue represents unearned revenue generated from the sale of new franchises and the approval of new franchisee locations. Franchise fee and development fee revenues are recognized when performance obligations are satisfied. Management determined that performance obligations related to franchise fees are satisfied over time and revenue is recognized over the term of the franchise agreement.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, deferred revenue, which represents unearned revenue from franchise sales and new location approvals, was $145,000 as of December 31, 2022. The document also states that the company had approximately $145,000 of contract liabilities as of December 31, 2022.
However, the FDD does not explicitly state the deferred revenue as of December 31, 2023. Without this figure, it is impossible to calculate the change in deferred revenue for Better Blend during the year ended December 31, 2023.
A prospective franchisee should ask Better Blend for the exact deferred revenue figure as of December 31, 2023, to understand how much revenue from franchise fees has not yet been recognized. This information, along with an understanding of Better Blend's revenue recognition policies, will help a franchisee understand the company's financial health and stability.