For Cinnabon, what amount of deferred revenue is expected to be recognized in 2027 related to performance obligations that are partially satisfied at the end of the year?

According to Cinnabon's 2025 Franchise Disclosure Document, the company anticipates recognizing $2,436 in revenue during the fiscal year 2027 related to performance obligations that are partially satisfied at the end of the year. This deferred revenue stems from franchise and development fees associated with open Cinnabon stores (SBRs) and is recognized over time. The performance obligations are considered partially satisfied at the end of each year, leading to the recognition of a portion of the deferred revenue.

For a prospective Cinnabon franchisee, this deferred revenue recognition indicates how Cinnabon accounts for its franchise and development fees. Instead of recognizing the entire fee upfront, Cinnabon spreads the revenue recognition over the term of the franchise agreement, which is typically 10-20 years, commencing when the store opens. This accounting practice aligns with the principle of recognizing revenue as the related services are provided.

The FDD also provides a schedule of expected revenue recognition for other years, including $3,346 in 2025, $2,580 in 2026, $2,276 in 2028, $2,083 in 2029, and $16,166 thereafter. Additionally, $28,887 in deferred revenue is related to open SBRs. These figures offer insight into the future revenue streams Cinnabon expects to realize from its existing franchise agreements.

It is important to note that the deferred revenue figures do not include revenue related to unsatisfied future performance obligations associated with unopened SBRs, which amounted to $24,501. This deferred revenue will be recognized over the terms of the respective franchise agreements once the related stores are opened. Understanding these revenue recognition practices can help a potential franchisee better assess Cinnabon's financial health and future revenue projections.