What is the reported value of Cinnaholic's Deferred Revenues - ST (short term)?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Current Assets | $2,487,071.19 | | Other Assets | | | Accounts Receivable - Accrual | 174,944.79 | | Inter-Company Receivable Athens | 0.00 | | Notes Receivable - F4 Investments | 0.18 | | Total Other Assets | $174,944.97 | | TOTAL ASSETS | $2,662,016.16 |
Balance Sheet As of April 30, 2025
| TOTAL | |
|---|---|
| LIABILITIES AND EQUITY | |
| Liabilities | |
| Current Liabilities | |
| Other Current Liabilities | |
| Accounts Payable Accrual | 13,282.0 |
| Advertising Fund Liability | 10,218.00 |
| Deferred revenues - ST | 1,013,889.00 |
| Direct Deposit Payable | 0.0 |
| Gift Cards | 7,370.7 |
| Interest Payable | 10,661.00 |
| Loan from On Deck | 0.00 |
| Loan from SBA | 0.00 |
| Payroll Liabilities | 295,119.69 |
| Total Other Current Liabilities | $1,350,540.43 |
| Total Current Liabilities | $1,350,540.43 |
| Long-Term Liabilities | |
| Ci |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 61)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the company's short-term deferred revenues are valued at $1,013,889.00 as of the balance sheet date. This figure represents revenues that Cinnaholic has received but not yet recognized as earned income. In the context of franchising, deferred revenues typically include initial franchise fees for which Cinnaholic has not yet fulfilled its obligations to the franchisee. These obligations may include providing training, site selection assistance, or other pre-opening support. As Cinnaholic fulfills these obligations over time, the deferred revenue is recognized as earned revenue on the income statement.
For a prospective Cinnaholic franchisee, the deferred revenue balance provides insight into the financial health and future revenue streams of the franchisor. A substantial deferred revenue balance suggests that Cinnaholic has a pipeline of new franchise locations that will contribute to future revenue. However, it is also important to consider the obligations associated with these deferred revenues. Cinnaholic must have the resources and capabilities to support new franchisees and fulfill its contractual obligations. If Cinnaholic fails to meet these obligations, it could face legal and financial repercussions.
It's worth noting that deferred revenue is a common accounting practice in the franchise industry. Franchisors often receive initial franchise fees upfront but defer revenue recognition until they have provided the agreed-upon services. This accounting treatment ensures that revenue is recognized in the period when it is earned, rather than when the cash is received. Franchisees should carefully review the franchisor's financial statements and related notes to understand the nature and extent of deferred revenues. This information can help franchisees assess the franchisor's financial stability and future growth prospects.
In addition to short-term deferred revenues, Cinnaholic also reports long-term deferred revenues of $2,632,111.00. This indicates that Cinnaholic has a significant amount of revenue that will be recognized over a longer period, likely related to ongoing franchise agreements and royalties. Reviewing both short-term and long-term deferred revenues provides a more complete picture of Cinnaholic's financial position and future revenue potential.