What was the balance of deferred franchise fees for Hck Hot Chicken at January 1, 2022?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
ferred revenue
The following table presents changes in the Company's deferred revenues for the years ended December 31, 2023 and 2022:
| | | 2023 | | | 2022 | | |--------------------------------------
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, the balance of deferred franchise fees at January 1, 2022, was $10. This figure represents the amount of franchise fees that Hck Hot Chicken had collected but not yet recognized as revenue as of that date. These fees are typically associated with initial franchise fees paid by new franchisees.
The deferred franchise fees are recognized as revenue over a period of time, usually coinciding with the period over which the franchisor provides services to the franchisee. This accounting practice aligns the revenue recognition with the actual delivery of services and benefits to the franchisee.
For a prospective Hck Hot Chicken franchisee, understanding the deferred revenue is crucial because it reflects the financial health and stability of the franchise system. It also indicates how the franchisor accounts for initial fees and recognizes revenue, which can impact the franchisor's reported financial performance.