How much in non-refundable franchise fees did Hyper Kidz recognize 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 the 2024 Hyper Kidz Franchise Disclosure Document, the company recognized $4,279 in non-refundable franchise fees during the year 2022. This figure represents the portion of initial franchise fees that Hyper Kidz recognized as revenue during that specific year. The initial franchise fee is typically paid upfront by new franchisees, and Hyper Kidz recognizes this revenue over time as it fulfills its obligations under the franchise agreement.
For a prospective Hyper Kidz franchisee, this information provides insight into how the franchisor accounts for franchise fee revenue. The recognition of only a portion of the fees in the initial year suggests that Hyper Kidz provides ongoing services or support to franchisees over a period of time. This accounting practice aligns with the concept of deferred revenue, where the revenue recognition is delayed until the service is fully rendered.
Understanding the revenue recognition schedule is crucial for franchisees as it can impact the franchisor's financial performance and stability. While the initial franchise fee is non-refundable, the recognition of the fee over time indicates a commitment from Hyper Kidz to support its franchisees throughout the term of the agreement. This can be a positive sign for potential franchisees, as it suggests a vested interest in their success.