What is the total amount of contract liabilities for Itan as of December 31, 2024?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2023 | ||
|---|---|---|
| Franchise locations, beginning of year | 29 | 31 |
| Opened franchise locations | ( | - |
| Closed franchise locations | 1 | 2 |
| Franchise locations, end of year | 28 | 29 |
During 2024 and 2023, the number of franchise locations owned by a related party were zero and five, respectively (see note 5).
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NOTE 7 ACCRUED LIABILITIES
Accrued Liabilities consist of the following:
| Accrued payroll | $ | 14,518 | $ 4,743 | |--------------
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, as of December 31, 2024, the company's contract liabilities totaled $103,500. This figure reflects obligations arising from an Area Development Agreement (ADA) signed in December 2023.
The ADA, a ten-year non-refundable agreement, pertains to the opening of 10 to 20 salons over its duration. The revenue from this agreement is recognized on a straight-line basis throughout the ten-year period. For the year ending December 31, 2024, $11,500 was allocated towards revenue classified as Area Development Agreement fees.
This means that Itan received $115,000 in 2023 related to the ADA, and is recognizing that revenue over the 10 year period. The contract liabilities represent the deferred revenue that Itan has not yet recognized as earned. For a prospective franchisee, this indicates the financial structure of Itan's development agreements and how revenue from such agreements is accounted for over time.