What was the change in deferred franchise costs and prepaid expenses for City Wide in 2023?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
| - | | - | - | | 39,507 | 39,507 | | Distributions | | | | | | | (16,582,517) | | | (16,582,517) | | Balance December 31, 2024 | $ | 2,100 | $ | 210,000 | $ | 366,366 | $ 13,031,512 | $ | 54,347 | $ 13,664,325 |
City Wide Franchise Company, Inc. & Subsidiaries Consolidated Statements of Cash Flows Years Ended December 31, 2024, 2023, and 2022
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Operating Activities | |||
| Net income | $ 19,161,078 | $ 14,196,288 | $ 10,941,550 |
| Items not requiring (providing) cash | |||
| Depreciation | 999,912 | 1,063,068 | 1,095,919 |
| Bad debt expense | 160,526 | 54,103 | 13,153 |
| Noncash operating lease cost | 94,315 | 91,359 | 88,451 |
| Loss on abandonment of software subscription | 1,454,554 | - | - |
| Effect of foreign currency translation (gain) loss | 39,507 | (6,653) | 26,999 |
| Deferred compensation | 455,292 | 614,155 | - |
| Changes in | |||
| Accounts receivable | (838,659) | (645,018) | (691,842) |
| Deferred franchise costs and prepaid expenses | (319,698) | 46,486 | (241,676) |
| Inventory | 58,725 | (75) | (8,355) |
| Software subscription | (631,500) | (891,054) | - |
| Accounts payable | 3,969,091 | 2,603,540 | 3,211,061 |
| 920,639 | 113,353 | 363,757 | |
| Accrued expenses | (182,963) | (180,007) | (177,099) |
| Operating lease liabilities | |||
| Deferred franchise revenue and other deferred income | 503,293 | 555,702 | 1,223,390 |
| Deferred compensation | (340,500) | (144,863) | 119,200 |
| Refundable advance | (1,618,485) | 2,041,208 | - |
| Net cash provided by operating activities | 23,885,127 | 19,511,592 | 15,964,508 |
| Investing Activities | |||
| Purchase of property and equipment | (311,516) | - | - |
| Increase in cash value of life insurance | (599,375) | (349,479) | (108,180) |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the combined change in deferred franchise costs and prepaid expenses in 2023 was $46,486. This figure reflects the net effect of how these expenses impacted City Wide's cash flow during that year.
For a prospective franchisee, this number provides insight into how City Wide manages and accounts for these specific costs. Deferred franchise costs typically relate to the initial expenses City Wide incurs in setting up a new franchise, while prepaid expenses are payments made in advance for services or goods to be received in the future. The increase of $46,486 suggests that City Wide may have strategically managed these expenses, potentially deferring costs to later periods or optimizing prepaid arrangements.
It's important to note that this figure is just one component of City Wide's overall financial performance. Franchisees should consider this number in conjunction with other financial data, such as revenue, net income, and total assets, to gain a comprehensive understanding of City Wide's financial health. Additionally, prospective franchisees may want to inquire about the specific types of expenses included in these categories to better understand the underlying drivers of this change.