What was the revenue recognized by Carls during the period in 2023?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
of the restaurants sold. As discussed within the section "Goodwill and Intangible Assets" in this Note 1, we include goodwill in the carrying amount of the restaurants in determining the gain or loss on disposal. 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
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the revenue recognized during the period in 2023 was $(6,142) as shown in one table and $(6,120) in another table. These figures represent a reduction in deferred franchise fees due to revenue recognition. This indicates the amount of deferred franchise fees that Carls recognized as actual revenue during that fiscal year.
For a prospective Carls franchisee, this information is relevant because it provides insight into how Carls accounts for franchise fees. Franchise fees are initially deferred when received and then recognized as revenue over the contractual term of the franchise agreement, typically after the restaurant opens. The negative values indicate that Carls is recognizing previously deferred revenue, which is a standard accounting practice in franchising.
It's important to note that these figures specifically relate to the recognition of deferred franchise fees and do not represent the total revenue of Carls. Total revenue would include royalties, sales from company-operated restaurants, and other sources of income. A potential franchisee should review the complete financial statements in Item 21 of the FDD to understand all revenue streams and the overall financial health of Carls.