How much did Hyper Kidz collect in royalties in advance in 2021?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
68 | | 1,468 | | Net income | | 52,292 | | | | - | | BALANCE, DECEMBER 31, 2022 | $ | 55,630 | $ | (176,919) | $ | (173,581) |
FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020 BOOMERANG FRANCHISE, LLC STATEMENTS OF CASH FLOWS
| 2022 | 2021 | 2020 | |
|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Net income) | $ 52,292 | $ 46,173 | $ 110,241 |
| Adjustments to reconcile net income to net | |||
| cash provided by operating activities: | |||
| Recognition of non-refundable deferred franchise sales | (4,279) | (3,950) | (6,913) |
| Changes in assets and liabilities: | |||
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the company collected $36,612 in royalties in advance during 2021. This figure is detailed within the cash flow statements under 'CASH FLOWS FROM OPERATING ACTIVITIES' as 'Royalties collected in advance.'
For a prospective Hyper Kidz franchisee, understanding the franchisor's handling of advance royalty payments is crucial. Royalties collected in advance represent payments received for services or access to the Hyper Kidz system that have not yet been fully earned. This liability reflects Hyper Kidz's obligation to provide future services or benefits in exchange for the upfront payment. The fact that this amount is positive in 2021 and negative in 2022 and 2023 indicates a fluctuation in how Hyper Kidz manages these advance payments over time.
It's important to note that advance royalty collection practices can vary across franchise systems. Some franchisors may not collect royalties in advance at all, while others might have specific policies dictating the terms and conditions of such payments. A potential franchisee should inquire about Hyper Kidz's specific policies regarding advance royalty payments, including when and why they are collected, and how they are applied to ongoing royalty obligations. Understanding these details will help a franchisee manage their own cash flow and financial planning more effectively.