For Big Blue Swim School, what was the total amount of deferred revenue at the end of 2024?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
old to a related party through common ownership
NOTE 4. MEMBER'S DEFICIT
The Company has historically sustained losses primarily due to the timing of revenue recognition of franchise fees and, as a result, has an accumulated member's deficit of $3,021,265 as of December 31, 2024. During the year ended December 31, 2024, the Company had cash used in operations of $2,445,570. Since inception, the Company's operations have been funded through a combination of capital contributions. Management has represented that the Company is growing and, as such, is incurring expenditures in the near term to benefit the future as developers open franchised units and as the Company looks to grow the franchisee base and expand into new markets. In addition, management has represented certain expenses could be reduced or eliminated in order to improve operating cash flows, as needed, in the future.
As of December 31, 2024, the Company had $579,182 of unrestricted cash. The Company has positive working capital of $726,835, of which $124,919 of current liabilities are related to de
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 75)
What This Means (2025 FDD)
According to Big Blue Swim School's 2025 Franchise Disclosure Document, as of December 31, 2024, the company had an accumulated member's deficit of $3,021,265. The company's financial statements also indicate that it had positive working capital of $726,835, which includes $124,919 of current liabilities related to deferred revenue. This deferred revenue is expected to be recognized as revenue in the following year.
Deferred revenue, in the context of Big Blue Swim School, primarily consists of unamortized initial franchise fees received from franchisees. These fees are recognized as revenue over the term of the franchise agreement rather than immediately upon receipt. This accounting practice aligns with the principle of recognizing revenue when it is earned, which, in the case of franchise fees, is considered to be over the life of the franchise agreement.
For a prospective Big Blue Swim School franchisee, understanding deferred revenue is crucial because it reflects the franchisor's financial stability and accounting practices. The fact that a portion of the initial franchise fees is recognized over time indicates a long-term perspective and alignment of interests between the franchisor and franchisee. Additionally, the disclosure of these figures in the financial statements provides transparency and allows potential franchisees to assess the financial health and sustainability of the Big Blue Swim School franchise system.