What was the balance of deferred non-refundable franchise fees for Hyper Kidz at the beginning of 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 balance of deferred non-refundable franchise fees at the beginning of 2022 was $28,637. This figure represents the amount of franchise fees that Hyper Kidz had collected but not yet recognized as revenue as of January 1, 2022. These fees are typically deferred and recognized over time as the franchise fulfills its obligations to the franchisee.
For a prospective Hyper Kidz franchisee, this deferred revenue balance indicates the franchisor's financial health and how it manages its revenue recognition. A higher beginning balance could suggest strong franchise sales in prior periods. The changes in this balance throughout the year—including deferrals and recognitions—reflect Hyper Kidz's ongoing franchise activities and revenue recognition practices.
It's important to note that these are non-refundable fees, meaning franchisees cannot get this money back. The recognition of these fees over time impacts Hyper Kidz's financial statements, specifically its revenue and cash flow. Reviewing these figures helps potential franchisees understand the financial dynamics between Hyper Kidz and its franchisees.