What was the total long-term deferred revenue for Hck Hot Chicken as of December 31, 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 | |||||
|---|---|---|---|---|---|---|
| Deferred franchise fees: | ||||||
| Balance at January 1 | $ | 78,667 | $ | 10.0 | ||
| Payments due on contracts | 80,000 | 80,000 | ||||
| Revenue recognized during the period | ( | 10,334 | ) | ( | 1,333 | ) |
| Balance at December 31 | $ | 148,333 2023 | $ | 78,667 2022 | ||
| Deferred area rep fees: | 777 | |||||
| Balance at January 1 | S | 168,000 | S | G#1 | ||
| Payments due on contracts | 444,900 | 238,000 | ||||
| Revenue recognized during the period | ( | 81,660 | ) | ( _ | 70,000 | ) |
| Balance at December 31 | $ | 531,240 | $ | 168,000 | ||
| Total deferred revenue | $ | 679,573 | $ | 246,667 | ||
| - | 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 total long-term deferred revenue as of December 31, 2022, was $238,667. This figure represents revenue that Hck Hot Chicken has received but not yet recognized as earned, specifically related to franchise and area representative fees. Deferred revenue typically arises when Hck Hot Chicken collects payments upfront for services or rights that will be delivered or provided over a future period.
For a prospective franchisee, understanding deferred revenue is crucial because it reflects the financial obligations Hck Hot Chicken has to its franchisees and area representatives. A higher deferred revenue balance might indicate strong future revenue recognition, but it also signifies a commitment to deliver services or support related to those initial fees. This balance is composed of $78,667 in deferred franchise fees and $168,000 in deferred area rep fees as of December 31, 2022.
The FDD also provides a breakdown of how deferred revenue changed from January 1, 2022, to December 31, 2022, including payments due on contracts and revenue recognized during the period. This detailed view allows potential franchisees to assess the stability and growth of Hck Hot Chicken's revenue streams and understand how the company manages its financial obligations over time. Reviewing these figures in comparison to subsequent years can provide insights into trends and the overall financial health of the franchise system.
It is important for potential franchisees to consult with a financial advisor to fully understand the implications of deferred revenue and how it relates to the overall financial performance and stability of Hck Hot Chicken. This analysis, combined with other financial metrics in the FDD, can help in making an informed decision about investing in a Hck Hot Chicken franchise.