How much did Kitchen Solvers collect in initial franchise fees in 2023?
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 company collected $405,000 in initial franchise fees during 2023. This figure represents the total amount of initial franchise fees Kitchen Solvers received from new franchisees throughout the year. It's important to note that this is the amount collected, not necessarily the amount of revenue recognized, as the revenue recognition for initial franchise fees is spread over the life of the franchise agreement, which is generally 10 years.
For a prospective Kitchen Solvers franchisee, this indicates the scale of new franchise sales activity during that year. While not direct revenue to Kitchen Solvers due to the revenue recognition schedule, the initial franchise fee collections are a key indicator of the company's growth and the demand for Kitchen Solvers franchises.
Understanding the difference between collections and revenue recognition is crucial. While Kitchen Solvers collected $405,000 in initial fees, the amount recognized as revenue for that year from initial franchise fees was $232,748. The remaining portion is recorded as a contract liability and recognized over the term of the franchise agreement. This accounting practice is common in the franchise industry, as it aligns the revenue with the ongoing services and support provided to the franchisee over the life of the agreement.