How much revenue did Gokhale Method recognize from franchise fees as of December 31, 2020?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
regated revenue are as follows:
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Revenue recognition | ||
| Franchise fees | $ 25,998 | $ 25,576 |
| Royalty | 28,918 | 42,599 |
| Other | 13,480 | 7.670 |
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to Gokhale Method's 2024 Franchise Disclosure Document, the company recognized $25,576 in revenue from franchise fees as of December 31, 2020. This figure represents the revenue recognized during that year from the initial and renewal fees paid by franchisees. It's important to note that Gokhale Method recognizes these fees over the term of the franchise agreement, rather than entirely at the time of payment. This accounting practice is common in franchising, as it aligns the revenue recognition with the ongoing services and support provided to franchisees.
For a prospective Gokhale Method franchisee, this indicates the level of revenue the company derives from its franchise operations. While this is not the total amount of fees collected, it represents the portion of those fees that Gokhale Method has recognized as earned revenue in that specific year. The initial franchise fee for Gokhale Method is $4,000 per franchise for a five-year term. This fee is classified as deferred revenue and recognized over the franchise term.
Understanding the revenue recognition policy is crucial for franchisees, as it affects how the franchisor's financial performance is assessed. The deferred revenue accounting method provides a more accurate picture of the franchisor's financial stability and long-term prospects. In addition to franchise fees, Gokhale Method also collects revenue from royalties and other sources, such as continuing education fees. These fees are included in the continuing education caption of the Statement of Operations.