What were the Itan area development agreement fees in 2024?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | |
|---|---|---|
| ASSETS | ||
| ASSETS | ||
| CURRENT ASSETS | ||
| Cash | $ 12,947 | $ 349,230 |
| Accounts receivable | 126,374 | 96,871 |
| Due from related parties (note 5) | 1,700,000 | 1,550,230 |
| Prepaid expenses | 13,426 | 9,196 |
| Prepaid taxes | 137,975 | - |
| Deferred tax asset (note 9) | 40,619 | 37,027 |
| 2,031,341 | 2,042,554 | |
| PROPERTY AND EQUIPMENT (note 3) | 70,353 | 88,280 |
| The Entry Alb Equilibria (note 3) | ||
| TOTAL ASSETS | 2,101,694 | 2,130,834 |
| LIABILITIES AND STOCKHOLDER'S EQUITY | ||
| CURRENT LIABILITIES | ||
| Accounts payable | 16,029 | 3,765 |
| Accrued liabilities (note 7) | 63,191 | 47,595 |
| Accrued taxes | 訓 | 60,182 |
| Contract liabilities (note 8) | 103,500 | 115,000 |
| Deferred tax liability (note 9) | 49,948 | 39,617 |
| Note payable - current portion (note 10) | 17,413 | 15,038 |
| 250,081 | 281,197 | |
| LONG TERM LIABILITIES | ||
| Note payable (note 10) | 39,561 | 56 |
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the area development agreement fees recognized as revenue for the year 2024 were $11,500. This figure represents the portion of fees from a ten-year agreement signed in December 2023 that Itan allocated as revenue during 2024. The original agreement stipulated the opening of ten to twenty salons over the ten-year period. The fees are recognized on a straight-line basis over the term of the agreement.
It's important to note that this $11,500 represents the recognized revenue, not necessarily the total amount paid by area developers in 2024. The total amount of area development agreement fees received by Itan in 2024 may be different due to the timing of when agreements were signed and payments were made. The remaining balance of unrecognized area development agreement fees is classified as contract liabilities.
For prospective Itan franchisees considering an area development agreement, understanding how these fees are structured and recognized is crucial. The initial investment for an area development agreement could be substantial, and the revenue recognition schedule will impact Itan's financial statements. Franchisees should inquire about the total cost of area development agreements, the payment schedule, and the specific terms for revenue recognition to fully understand the financial implications.