How much did City Publications recognize in non-refundable deferred franchise fees in 2024?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPT]
| December 31, | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| Deferred Non-refundable Franchise Fees: | ||||
| Balance beginning of year | $ | 56,679 | $ | 48,752 |
| Deferral of non-refundable franchise fees | 59,400 | 30,300 | ||
| Recognition of non-refundable franchise fees | (34,253) | (22,373) | ||
| Balance at end of year | $ | 81,826 | $ | 56,679 |
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 deferred franchise fees during the year 2024. This figure represents the amount of previously deferred franchise fees that City Publications recognized as revenue during that year. These fees were initially collected but not immediately recognized as revenue, and instead were deferred to a later period. The recognition of these fees impacts City Publications' financial statements, specifically the revenue and balance sheet.
Deferred revenue is a common accounting practice, especially in franchising, where initial franchise fees are often collected upfront but the franchisor's obligations (such as training, site selection assistance, and providing operations manuals) extend over a period of time. The franchisor recognizes the revenue as they fulfill these obligations. This accounting treatment provides a more accurate picture of the company's financial performance over time.
For a prospective City Publications franchisee, understanding the deferred revenue recognition is important for assessing the franchisor's financial health. It indicates how much of the company's reported revenue is based on actual services provided during the period versus upfront payments that will be recognized later. Reviewing the trend of deferred revenue recognition over several years can provide insights into the stability and growth of the franchise system. A significant drop in deferred revenue recognition could signal a decline in new franchise sales or a change in the franchisor's accounting practices, which would warrant further investigation.
It is also important to note that the estimated revenues to be recognized in future periods related to deferred franchise fees as of December 31, 2024 are listed in the FDD. Reviewing these amounts can provide insight into the future revenue stream for City Publications.