What was the amount of non-refundable deferred franchise sales recognized by Hyper Kidz in 2022?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
ncial position or results of operations of the Company.
NOTE 2 – CONTRACT BALANCES
The Company recorded a liability for unearned revenue associated with the performance obligation of the Company's franchise agreements. The account balances and activity are as follows:
| December 31, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Deferred Non-refunda |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the recognition of non-refundable franchise fees for the year 2022 was $4,279. This figure represents the amount of previously deferred franchise fees that Hyper Kidz recognized as revenue during that year. These fees were initially collected but not immediately recognized as revenue, following accounting practices that defer recognition over a period.
For a prospective Hyper Kidz franchisee, this indicates how the franchisor accounts for franchise fees. The initial franchise fee paid to Hyper Kidz is not immediately recognized as income by the franchisor. Instead, a portion is recognized over time. This accounting practice can affect the franchisor's reported financial performance in any given year.
Understanding the deferred revenue recognition is crucial for assessing the financial health and stability of Hyper Kidz. Franchisees should consider this aspect, along with other financial metrics, to gain a comprehensive view of the franchisor's financial practices. Reviewing these figures over several years can provide insights into the franchisor's revenue trends and accounting consistency.