What was the change in gift card liability for Gold Star in 2023?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
amortization:
| Cost Accumulated Amortization | $ 83,112 83,112 | $ 83,112 83,112 | $_ | 83,112 83,112 | |----------------------------------------|------------------------|------------------------|-----|--------------------| | Broker's Fees, Net | - | - | _ | | | Cost Accumulated Amortization | 217,098 168,503 | 217,098 158,111 | _ | 236,023 166,067 | | Design Costs, Net | 48,595 | 58,987 | _ | 69,956 | | Intangibles Subject | $ 48,595 | $ 58,987 | $_ | 69,956 | | to Amortization | | | | | Amortization of these costs was $10,392, $10,967, and $41,576 for the years ended December 31, 2024, 2023, and 2022, respectively. Estimated amortization for the subsequent five years and thereafter is as follows:
| 2025 | $ 10,393 |
|---|---|
| 2026 | 10,393 |
| 2027 | 10,393 |
| 2028 | 10,393 |
| 2029 | 7,023 |
| $ 48,595 |
NOTE 8 – GIFT CARD LIABILITY
The Tom + Chee brand participates in a national gift card program. The total gift cards outstanding under the program at December 31, 2024, 2023, and
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the company's gift card liability increased by $2,909 in 2023. At the end of 2023, the gift card liability was $64,009, compared to $61,100 at the end of 2022. This liability represents the balance on gift cards issued since September 2017, the date the brand was acquired by the owner.
Gold Star participates in a national gift card program, and the amounts recorded as liabilities reflect the company's obligation to honor these gift cards when presented for payment. However, the company does not record additional liability for gift cards purchased before the acquisition date, as historical data suggests that only a nominal amount of these older gift cards will be redeemed. The amounts paid on these pre-acquisition gift cards were immaterial to the overall financial statements for the years 2022, 2023, and 2024.
For a prospective franchisee, this information indicates the level of financial obligation Gold Star has related to outstanding gift cards. It also shows how the company accounts for gift card liabilities, distinguishing between those issued since the acquisition date and those issued before. Understanding these accounting practices can help a franchisee better interpret the company's financial statements and assess the potential impact of gift card redemptions on their own franchise's financial performance.