What was the total amount of additions for initial franchise fees received by Exit in 2022?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
e to be issued, the Company continues to sell franchises, and is generating franchise commissions revenues from open and operating franchisees. The Company believes that the combination of the actions taken, along with the decrease in interest rates that are projected to induce housing market stimulation, will enable the Company to meet its funding requirements for one year from the date these financial statements were available to be issued. If necessary, stockholders of the Company intend to provide any financial assistance needed by the Company should its cash flows from operations combined with its cash balances no
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the total amount of additions for initial franchise fees received in 2022 was $80,000. This figure represents the gross amount of initial franchise fees collected during that year, before any deductions or recognition as revenue. These initial franchise fees are a crucial source of income for Exit, especially as they expand their franchise network.
It's important to note that this $80,000 does not represent Exit's actual recognized revenue for 2022 from these fees. As detailed elsewhere in the FDD, Exit recognizes initial franchise fees as revenue on a straight-line basis over the term of the franchise agreement. This means that the $80,000 collected in 2022 would be recognized as revenue gradually over the following years, rather than all at once. The deferred revenue accounting method is a common practice in the franchise industry, as it aligns revenue recognition with the delivery of ongoing services and support to franchisees.
Prospective Exit franchisees should understand the difference between initial fees received and revenue recognized. While Exit collected $80,000 in initial fees in 2022, the actual revenue recognized from those fees in that year would be a smaller amount, as shown in the table ($117,545 is the total revenue recognized during the year, which includes more than just initial franchise fees). This distinction is important for assessing Exit's financial performance and understanding how the company manages its revenue streams.