What was the amount of collections of initial franchise fees for Kitchen Solvers in 2024?
Kitchen_Solvers Franchise · 2025 FDDAnswer from 2025 FDD Document
t Auditor's Report
Note 4 Contract Assets and Liabilities (Continued)
The following table provides information about significant changes in contract liabilities and assets for the years ended December 31:
| 2024 | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|
| Contract liabilities - Net of contract assets, | ||||||
| beginning | $ 582,519 | $ | 518,363 | $ | 437,293 | |
| Initial franchise fee revenue recognized | (259,581) | (232,748) | (193,048) | |||
| Contract costs recognized | 138,404 | 120,154 | 105,366 | |||
| New contract costs paid | (200,000) | (228,250) | (292,000) | |||
| Collections of initial franchise fees | 488,991 |
Source: Item 21 — Financial Statements (FDD pages 48–49)
What This Means (2025 FDD)
According to Kitchen Solvers' 2025 Franchise Disclosure Document, the collections of initial franchise fees totaled $488,991 in 2024. This figure represents the actual cash received by Kitchen Solvers from new franchisees related to their initial franchise fees during that year.
It's important to note that this collection amount may differ from the initial franchise fee revenue recognized during the same period, which was $259,581. The difference arises because Kitchen Solvers recognizes initial franchise fee revenue over the life of the franchise agreement, which is generally 10 years, as stated in Note 3. This means that the revenue is recognized gradually each year, while the collections represent the actual cash inflow received upfront.
For a prospective Kitchen Solvers franchisee, understanding the difference between collections and revenue recognition is crucial for assessing the franchisor's financial health. The collections figure provides insight into the immediate cash flow generated from new franchise sales, while the revenue recognition method reflects how those fees are accounted for over time. Reviewing both figures can offer a more comprehensive view of Kitchen Solvers' financial performance and stability.