What is the total deferred revenue for open SBRs that Carvel expects to recognize?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
erred revenue and Long-term deferred revenue | $ 53,388 | $ 49,115 |
The Company expects to recognize revenue in the future related to performance obligations that are partially satisfied at the end of the year:
| Changes in deferred franchise and development fees are as follows: | |
|---|---|
| December 29, December 31, | |
| For the fiscal years ended: 2024 2023 | |
| Deferred revenue at the beginning of the year $ 49,115 $ 50,740 | |
| Revenue recognized during the year (9,152) (10,569) | |
| Deferrals due to cash received and other 13,425 8 ,944 | |
| Deferred revenue and Long-term deferred revenue $ 53,388 $ 49,115 | |
| The Company expects to recognize revenue in the future related to performance obligations that are partially | |
| satisfied at the end of the yea |
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, the company has $28,887 in deferred revenue for open SBRs. This revenue is expected to be recognized in the future as the performance obligations are satisfied. Carvel anticipates recognizing $3,346 in 2025, $2,580 in 2026, $2,436 in 2027, $2,276 in 2028, $2,083 in 2029, and $16,166 thereafter.
Deferred revenue represents payments Carvel has received for which it has not yet provided the related services or products. In the case of franchise fees, Carvel defers the revenue and recognizes it over the term of the franchise agreement, which typically commences when the SBR is opened. This accounting practice aligns the revenue recognition with the actual delivery of the franchise benefits and support to the franchisee.
For a prospective Carvel franchisee, understanding deferred revenue is crucial because it reflects Carvel's financial obligations to provide ongoing support and services. The recognition of this revenue over several years indicates a long-term commitment from Carvel to its franchisees. It also demonstrates how Carvel's financial performance is tied to the success and longevity of its franchise network.
It is important to note that the deferred revenue for open SBRs does not include deferred revenue associated with unopened SBRs. According to the 2025 FDD, deferred revenue of $29,819 relates to the unsatisfied future performance obligations associated with unopened SBRs and is not included within the table above. This revenue will be recognized once the related SBRs are opened, typically over a period of 10-20 years, based on the terms of the franchise agreements.