What was the balance of contract liabilities for Big Apple Bagels at November 30, 2022?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
--------------------------------|------------------------|----------------------|--------------------|--| | Liabilities Contract liabilities-current Contract liabilities-long-term | 420,379 130,094 | | 458,162 162,026 | | | Total Contract Liabilities | $ 550,473 | $ | 620,188 | |
Note 3 - Revenue Recognition (continued)
Contract Balances (continued)
Accounts receivable represent weekly royalty payments that represent billed and unbilled receivables due as of November 30, 2024, 2023 and 2022. The balance of contract liabilities includes franchise fees and license fees that have ongoing contract right
Source: Item 23 — RECEIPTS (FDD pages 87–319)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, the balance of contract liabilities at November 30, 2022, was $692,062. This figure represents the amount Big Apple Bagels owes to others for services or goods that have not yet been provided or delivered, but for which payment has been received. These liabilities are a key indicator of the company's financial obligations and its ability to meet future commitments.
Contract liabilities typically arise from advance payments received for franchise fees, royalties, or other services that Big Apple Bagels is obligated to provide in the future. The balance of $692,062 suggests that Big Apple Bagels had a significant amount of unearned revenue at that time. This liability will decrease as Big Apple Bagels fulfills its obligations by providing the related services or goods, at which point the corresponding revenue will be recognized.
For a prospective franchisee, understanding the contract liabilities of Big Apple Bagels can provide insights into the company's revenue recognition practices and its financial health. A high balance of contract liabilities may indicate strong sales and future revenue potential, but it also highlights the company's responsibility to deliver on its promises. Franchisees should monitor these liabilities over time to assess the company's ability to manage its obligations and maintain a stable financial position.