What amount of non-refundable deferred franchise fees did City Publications recognize in 2024?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
l recently issued Accounting Standards Updates ("ASU"). The adoption of the recently issued ASUs, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
NOTE 2 – CONTRACTS WITH CUSTOMERS
The Company has recorded a liability for unearned revenue associated with the performance obligation of the Company's franchise agreements. The account bala
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, the company recognized $34,253 in non-refundable franchise fees during the year 2024. This figure represents the portion of initial franchise fees that City Publications recognized as revenue during that year. These fees were initially deferred, meaning they were collected but not immediately recognized as revenue, and then recognized over time as City Publications fulfilled its obligations to franchisees.
The recognition of deferred franchise fees is an accounting practice that aligns revenue recognition with the delivery of services or fulfillment of obligations to the franchisee. In City Publications' case, the initial franchise fee is largely allocated to pre-opening obligations, with the remainder recognized over the term of the franchise agreement, which is currently 10 years. This approach ensures that City Publications recognizes revenue as it provides ongoing support and services to its franchisees throughout the duration of the franchise agreement.
For a prospective City Publications franchisee, this information provides insight into how the company manages its finances and recognizes revenue. It also highlights the importance of understanding the terms of the franchise agreement, particularly the obligations of both the franchisor and franchisee, as these obligations dictate the timing of revenue recognition. Understanding these accounting practices can help a franchisee better assess the financial health and stability of City Publications.