How much did Kidokinetics collect in initial franchise fees in 2023?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
23, 2022, and 2021
| 2023 | 2022 | 2021 | |||
|---|---|---|---|---|---|
| Operating revenue | |||||
| Initial franchise fees | $ 2,796,637 | $ | 689,548 | $ | 281,000 |
| Royalty fees | 201,199 | 86,911 | 56,577 | ||
| Service revenue | 467,961 | 87,473 | - | ||
| Advertising fees | 29,635 | - | - | ||
| Apparel sales | 13,774 | 27,823 | - | ||
| Total operating revenue | 3,509,206 | 89 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the company collected $2,796,637 in initial franchise fees in 2023. This figure represents the total amount Kidokinetics received from new franchisees for the right to operate a Kidokinetics franchise location. These fees are a crucial part of Kidokinetics's revenue stream, reflecting the demand for its franchise opportunities.
It's important to note that Kidokinetics recognizes initial franchise fees over time. A portion of the initial franchise fee is allocated to pre-opening services and is recognized when the franchise begins operations. The remaining portion is deferred and amortized over the ten-year life of the franchise agreement. This accounting practice aligns the revenue recognition with the delivery of services and the ongoing benefit the franchisee receives from the Kidokinetics system.
For a prospective franchisee, this indicates the scale of investment others have made in the Kidokinetics franchise system. It also highlights the importance of understanding how Kidokinetics accounts for these fees, as it impacts the company's financial statements and overall profitability. Franchisees should inquire about the specific services covered by the initial franchise fee and the amortization schedule to fully understand the financial implications.