What was the amount of new deferrals due to cash received by Carls in 2024?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
. If we sublease a restaurant to a franchisee on terms that result in a probable loss, then we will establish a lease subsidy allowance and record a loss at the time we enter into the lease arrangement. As further described above, the amount of the estimated liability for the lease subsidy is the present value of our estimated future payments, net of the present value of the expected sublease income.
Contract Liabilities - Deferred Franchise Fees
The following table provides information about contract liabilities, specifically deferred franchise fees, received from contracts with customers:
| 2024 | 2023 | |
|---|---|---|
| Deferred franchise fees, beginning of year | $ 36,129 | $ 37,586 |
| Revenue recognized during the period | (5,084) | (6,120) |
| New deferrals due to cash received | 4,919 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the amount of new deferrals due to cash received in 2024 is listed in two separate tables within the financial statements. One table indicates new deferrals of $4,916, while the other shows $4,919. These figures represent the cash Carls received during 2024 that is allocated to future franchise services or products, and is therefore recognized as deferred revenue on the balance sheet.
For a prospective Carls franchisee, this indicates the amount of cash coming in from new franchise agreements that Carls is not yet recognizing as current revenue. This deferred revenue will be recognized over time as Carls fulfills its obligations under the franchise agreements. The difference in the amounts could be attributed to different accounting methods or reporting segments within the Carls organization.
It is important to note that these figures only reflect the new deferrals due to cash received during the year and do not represent the total deferred franchise fees liability. The total deferred franchise fees also include amounts deferred from previous years. A potential franchisee should review the complete financial statements and notes to understand Carls's revenue recognition policies and deferred revenue balances fully.