How much in non-refundable franchise fees did Hyper Kidz recognize in 2021?
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 company recognized $3,950 in non-refundable franchise fees during the year 2021. This figure represents the amount of deferred franchise fees that Hyper Kidz recognized as revenue during that specific year. These fees are initially deferred, meaning they are not immediately recognized as revenue when collected. Instead, they are recognized over time as Hyper Kidz fulfills its obligations to the franchisee.
For a prospective Hyper Kidz franchisee, this information provides insight into how the company accounts for its franchise fees. The recognition of non-refundable franchise fees indicates the portion of initial fees that Hyper Kidz has earned by fulfilling its initial obligations to franchisees, such as providing training, site selection assistance, and other pre-opening support. The deferred revenue is recognized over time as the franchisor fulfills its obligations.
It's important to note that the recognition of these fees is an accounting practice and doesn't directly impact the franchisee's initial investment. However, understanding how these fees are recognized can offer a clearer picture of the franchisor's financial health and revenue streams. Reviewing these figures over several years can also reveal trends in Hyper Kidz's franchise sales and revenue recognition practices, which can be a valuable part of due diligence.