As of December 29, 2024, what was the balance of deferred franchise fees for Buff City Soap?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
raight-line basis over the remaining term of the related agreement. The deferred revenue balance is primarily driven by cash payments received or due in advance of satisfying the Company's performance obligations.
As of December 29, 2024, the balance of deferred franchise fees and deferred development fees was $3,065 and $7,623, respectively. The weighted average remaining term of the current franchise agreements is approximately 6.9 years as of December 29, 2024. As of December 31, 2023, the balance o
Source: Item 6 — , Securities Offering Fee, in the amount column is revised to state the following: (FDD pages 216–303)
What This Means (2025 FDD)
According to Buff City Soap's 2025 Franchise Disclosure Document, the balance of deferred franchise fees as of December 29, 2024, was $3,065 (in thousands). Deferred franchise fees represent initial franchise fees that Buff City Soap has collected but not yet recognized as revenue on its income statement. This is a common accounting practice in franchising, as the franchisor typically defers revenue recognition until it has fulfilled its obligations to the franchisee, such as providing training and support to get the new location up and running.
For a prospective Buff City Soap franchisee, this deferred revenue balance indicates the amount of initial franchise fees that the company has received but not yet earned. The FDD also states that the balance of deferred development fees was $7,623 as of December 29, 2024. Development fees are associated with area development agreements, where a franchisee obtains the rights to open multiple locations within a specific territory. These fees are also deferred and recognized as revenue as each franchised location opens.
The fact that Buff City Soap has a substantial balance of deferred franchise and development fees suggests that the company is actively expanding its franchise system. It also implies that a portion of the initial fees paid by new franchisees is being used to support the pre-opening activities and ongoing support provided by the franchisor. The weighted average remaining term of the current franchise agreements is approximately 6.9 years as of December 29, 2024.
It's important to note that the amounts are presented in thousands, meaning the actual deferred franchise fees were $3,065,000 and deferred development fees were $7,623,000. Reviewing these deferred revenue balances can provide insights into the financial health and growth trajectory of Buff City Soap's franchising operations.