When does Deer Solution recognize revenue?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
57 as a current portion of the deferred expenses as it will be due within the next twelve months, $339,286 as a long-term portion of deferred expenses, and $67,857 recognized as commission expenses for the year ended 31, December 2022.
Deferred revenue consists of the remaining initial franchise fees to be amortized over the life of the franchise agreements. Deferred revenue is a result of the collection of the initial franchise fee at the time of the signing of the franchise agreement and will fluctuate each year based on the number of franchise agreements signed. In 2022, $300,857 of franchise fees collected were deferred over the life of the franchise
Source: Item 23 — RECEIPTS (FDD pages 55–246)
What This Means (2025 FDD)
According to the 2025 Deer Solution Franchise Disclosure Document, the company defers revenue consisting of initial franchise fees, which are then amortized over the life of the franchise agreement. This means that Deer Solution does not recognize the entire initial franchise fee as revenue immediately upon signing the franchise agreement. Instead, it spreads the recognition of this revenue over the term of the agreement.
In 2022, Deer Solution deferred $300,857 of franchise fees. Of this amount, $50,143 was recognized as the current portion of contract liabilities, representing the amount due within the next twelve months. The remaining $250,714 was classified as a long-term portion of contract liabilities. This indicates that Deer Solution recognizes a portion of the initial franchise fee as revenue each year over the 7-year term of the franchise agreement.
For a prospective Deer Solution franchisee, this accounting practice means that the franchisor's reported revenue in any given year does not fully reflect the total initial fees collected from new franchisees. Instead, it reflects the portion of previously collected fees that are being recognized in that period. This is a common accounting practice in the franchise industry, as it aligns revenue recognition with the ongoing services and support provided to franchisees over the term of their agreements.