What was the total revenue for Better Blend, according to the financial statements?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
NESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition (Continued)
The Company's revenue consists of fees from franchised restaurants operated by conventional franchisees. Revenue from conventional franchised restaurants include initial franchise fees, royalties based on percent of sales, marketing fees based on percent of sales, and development fees for locations the franchisee opens in addition to the initial location.
Royalties are collected on a weekly basis and are based on certain percentage as specified on the franchise agreement. Marketing fees are based on up to 1% of gross revenue. The marketing fund is used for marketing expenses related to maximizing public recognition of the Company's brand and marketing fund.
The initial franchise fees collected are determined on a franchisee-by-franchisee basis. The Company had ten franchisees under contract and four were operational as of December 31, 2023.
The Company had no contract assets and approximately $145,000 of contract liabilities as of December 31, 2022.
Advertising
The Company expenses advertising costs as incurred. Advertising expenses were approximately $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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, the company's revenue recognition is based on fees from franchised restaurants, including initial franchise fees, royalties, marketing fees, and development fees. For the year ending December 31, 2023, two customers accounted for 85% of Better Blend's total revenues. Franchise fee revenue was approximately $2,600 for the year ended December 31, 2022. As of December 31, 2022, Better Blend had three franchisees under contract, none of which were operational at that time. As of December 31, 2023, Better Blend had ten franchisees under contract, with four being operational. Advertising expenses for Better Blend were approximately $50,000 for the year ended December 31, 2023.
These figures provide a glimpse into Better Blend's revenue streams and operational scale. The concentration of revenue among a small number of customers highlights a potential risk for franchisees, as the loss of one of these key accounts could significantly impact the franchisor's financial stability. The growth in operational franchisees from none in 2022 to four in 2023 indicates an expanding network, which could translate to increased brand recognition and support for franchisees.
The details regarding revenue recognition and the types of fees Better Blend collects are important for prospective franchisees to understand. These factors influence the franchisor's income and, consequently, its ability to support the franchise system. The advertising expenses also show Better Blend's investment in marketing, which can benefit franchisees by driving customer traffic and enhancing brand awareness in their local markets.
However, the provided excerpts do not include the specific total revenue figure for Better Blend. A prospective franchisee should seek clarification from Better Blend regarding their total revenue to gain a comprehensive understanding of the company's financial performance and stability.