What was the deferred initial franchise fee revenue amount for Deka Lash in 2/31/2023?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
5 | 86,868 | | Interest income | | 06,704 | 1. | 618 | - 4 | | Employee retention credit income | | 811,828 | | - | | | Loss on disposal of fixed assets | | (15,000) | | - | - | | Interest expense | _ | - | | _ | (2,374) | | TOTAL OTHER INCOME (EXPENSE) | - | 862,951 | 85 | 163 | 84,494 | | NET INCOME | S | 220,255 | $ 225 | 549 | $ 717,454 |
| Balance at December 31, 2020 | $ (3,671,476) |
|---|---|
| Net income | 717,454 |
| Balance at December 31, 2021 | (2,954,022) |
| Net income | 225.549 |
| Balance at December 31, 2022 | (2,728.473) |
| Net income | 220,255 |
| Balance at December 31, 2023 | 5 (2,508,218) |
| 12 | 2/31/2023 | 2/31/2022 | 1 | 2/31/2021 | ||||
|---|---|---|---|---|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | Maria Agenta | |||||||
| Net income | 5 | 220,255 | 5 | 225,549 | $ | 717,454 | ||
| Adjustments to reconcile net income to net cash | ||||||||
| flows from operating activities: | ||||||||
| Depreciation | 17,948 | 13,439 | 19,608 | |||||
| Amortization | 18,000 | 13,556 | 1 | |||||
| Loss on disposal of property and equipment | 15,000 | - | 1 | |||||
| Allowance for notes receivable and doubtful accounts | 60,740 | - | ||||||
| Note receivable forgiveness | 71,469 | - | ||||||
| (Increase) decrease in operating assets: | ||||||||
| Accounts receivable | 445,348 | (295,995) | (239,322) | |||||
| Prepaid expense | 47,786 | 106,374 | (253,501) | |||||
| Inventory | 88,627 | 133,497 | (476,661) | |||||
| Deferred direct franchise costs | 473,893 | (78,089) | 65,581 | |||||
| Accrued interest - notes receivable | (5,259) | (1,618) | ||||||
| Deposits | 11,010 | (7,291) | (3,719) | |||||
| Increase (decrease) in operating liabilities: | ||||||||
| Accounts payable | 228,775 | 25,662 | (22,774) | |||||
| Accrued liabilities | (65,804) | 66,821 | 117,952 | |||||
| Deferred revenue | (61,584) | 66,092 | (28,768) | |||||
| Deferred initial franchise fee revenue | (1,079,797) | 122,394 | (264,725) | |||||
| Described initial statement for texture | _ | Arguerates | _ | 122,574 | - | (204,120) | ||
| NET CASH FLOWS PROVIDED BY (USED IN) | ||||||||
| OPERATING ACTIVITIES | 486,407 | 390,391 | (368,875) | |||||
| OFERATING SCHYIIIES | _ | 400,407 | _ | 390,331 | - | (300,013) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment | (2.372) | (96,271) | (17,730) | |||||
| Proceeds from disposal of property and equipment | 18,854 | 100,277 | 1.121.500 | |||||
| Purchase of intangible asset | (2,750) | (2,025) | ||||||
| Capitalized software development costs | 12(150) | (10,000) | (44,000) | |||||
| Payments from notes receivable | 27,367 | (10,000) | [44,000) | |||||
| Issuance of notes receivable | (30,000) | (104,050) | ||||||
| Net change on notes receivable - related parties | (414,495) | (85,520) | 217,489 | |||||
| iver change on notes receivable - related parties | (4)4,492 | _ | (93,249) | 417,402 | ||||
| NET CASH FLOWS (USED IN) PROVIDED BY | ||||||||
| INVESTING ACTIVITIES | (403,396) | (297,866) | 155,759 | |||||
| EVILSTEND ACTIVITIES | - | (403,50) | - | (437,000) | - | 1202102 | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Net change on note payable - related parties | (68,048) | (231,837 |
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, the deferred initial franchise fee revenue was a negative amount, representing a decrease of $1,079,797 as of February 31, 2023. This figure is part of the cash flow statement, specifically within the cash flows from operating activities. This indicates the change in deferred revenue related to initial franchise fees during that period.
Deferred revenue typically represents payments a company has received for goods or services that have not yet been delivered or earned. In the context of franchising, this often refers to the initial franchise fees that Deka Lash collects from new franchisees before they open their studios. The negative value suggests that Deka Lash recognized a significant portion of previously deferred franchise fee revenue during the fiscal year ending February 31, 2023, meaning they fulfilled their obligations to franchisees and could recognize the revenue on their income statement.
For a prospective Deka Lash franchisee, this information provides insight into the financial practices of the franchisor. It shows how Deka Lash accounts for initial franchise fees and how revenue recognition impacts their cash flow. While a negative change in deferred revenue isn't inherently negative, it's crucial to understand why such a large decrease occurred. A potential franchisee might want to inquire about the number of new studios opened during that period and how it affected the deferred revenue balance. It is important to note that February 31 is not a valid date and may indicate a typo or an unusual fiscal period end date.