What was the amount of new contract costs paid by Kitchen Solvers in 2022?
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 new contract costs paid in 2022 were $(292,000). This figure represents the cash outflow related to securing new franchise agreements during that year. For a prospective franchisee, this indicates the scale of Kitchen Solvers' investment in expanding its franchise network.
These costs are related to the initial franchise fees that Kitchen Solvers collects from new franchisees. The initial franchise fee revenue recognized in 2022 was $(193,048). The difference between the new contract costs paid and the initial franchise fee revenue recognized suggests that Kitchen Solvers may be investing more in acquiring new franchisees than it is immediately recouping through initial fees.
It's important to note that these figures are part of the overall financial health assessment. A potential franchisee should consider these costs in relation to the overall revenue, expenses, and profitability of Kitchen Solvers. Understanding the relationship between contract costs and revenue can provide insights into the growth strategy and financial sustainability of the Kitchen Solvers franchise system.