What was the change in deferred revenue for Lees Famous Recipe in 2021?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
pany-operated restaurants, royalties, franchise fees, market development fees, sales of proprietary goods, and other income from administrative services performed by staff. Sales by Company-operated restaurants are recognized on a cash basis. The Company presents sales net of sales tax and other sales-related taxes. Revenue from the sale of proprietary products is recognized at the point in time the product is shipped.
Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606") provides that revenues are to be recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration expected to be received for those goods or services. Initial fees are recognized as the Company satisfies the performance obligations. Management has determined that all performance obligations related to the initial fees are satisfied as preopening services are performed. Accordingly, revenue related to franchise fees and market development fees are recognized as revenue over time.
Deferred revenue is recorded for transactions where cash has been received prior to the recognition of revenue. Deferred revenue related to contracts with beverage companies was $182,611 and $182,875 as of December 31, 2023 and 2022, respectively. Remaining deferred revenue balances of $167,504 and $51,692 pertain to pre-opening serv
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 69)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Lees Famous Recipe recognizes revenue when control of goods or services is transferred to the customer. Deferred revenue is recorded when cash is received before revenue recognition. The FDD provides advertising expenses for the period ended December 31, 2021, but does not include specific deferred revenue figures for that year.
Without specific figures, it's impossible to calculate the exact change in deferred revenue for Lees Famous Recipe in 2021. The document details how deferred revenue is handled, noting it relates to contracts with beverage companies, pre-opening services, and unredeemed gift cards.
A prospective franchisee should ask Lees Famous Recipe for the specific deferred revenue amounts for the beginning and end of 2021 to fully understand the changes during that period. This information is crucial for assessing the company's financial performance and revenue recognition practices.