What was the change in deferred revenue for Exit in 2024?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Deferred revenue | $ 6,522,524 | $ 7,565,753 | $ 8,378,057 |
| Less: long-term portion of deferred | |||
| revenue | (3,381,807) | (3,929,136) | (4,854,640) |
| Deferred revenue | $ 3,140,717 | $ 3,636,617 | $ 3,523,417 |
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Deferred revenues – beginning of year | $ 253,796 | $ 317,558 | $ 308,853 |
| Additions for initial franchise fees received | 40,000 | 33,750 | 80,000 |
| Additions for renewal fees received | 25,750 | 19,500 | 28,250 |
| Additions for assignment fees received | 10,750 | 8,625 | 18,000 |
| Reduction for amounts deemed uncollectible | - | (10,100) | - |
| Revenue recognized during the year | (106,088) | (115,536) | (117,545) |
| Deferred revenues – end of year | $ 224,208 | $ 253,796 | $ 317,558 |
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, there are two tables showing deferred revenue. The first table shows that deferred revenue decreased from $7,565,753 in 2023 to $6,522,524 in 2024. This represents a decrease of $1,043,229 in deferred revenue for Exit. The second table shows that deferred revenues decreased from $253,796 in 2023 to $224,208 in 2024. This represents a decrease of $29,588 in deferred revenue for Exit.
Deferred revenue typically represents payments Exit has received for goods or services that have not yet been fully delivered or earned. For a franchisee, this means Exit holds funds for future obligations, such as franchise fees that will be recognized over the term of the agreement. A decrease in deferred revenue could indicate that Exit recognized more revenue during the year than it received in advance payments, or that overall sales decreased.
It is important to note that the two tables provided in the FDD excerpts show different figures for deferred revenue, so it would be prudent for a prospective franchisee to clarify with Exit which set of figures is most representative of the franchise's overall financial performance. Understanding the reasons behind changes in deferred revenue can provide insights into the financial stability and operational efficiency of Exit.