What was the contract liability, net of current, for Mr. Sandless as of December 31, 2024?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
| ASSETS | ||||
|---|---|---|---|---|
| YEARS ENDED DECEMBER 31 | 2024 | 2023 | ||
| Current Assets | ||||
| Cash | $ | 35,452 | $ | 50,575 |
| Accounts receivable | 41,949 | 49,667 | ||
| Inventory | 8,013 | 8,013 | ||
| Due from related party | 300 | 64,122 | ||
| Total Current Assets | 85,714 | 172,377 | ||
| Property and Equipment-net | 44,492 | 64,898 | ||
| Security deposit | 2,000 | 2,000 | ||
| Total Assets | $ | 132,206 | $ | 239,275 |
| LIABILITIES AND MEMBERS' (DEFICIT) | ||||
| Current Liabilities | ||||
| Accounts payable and accrued expenses | $ | 4,275 | $ | 244 |
| Contract Liability | 57,000 61, |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 41–42)
What This Means (2025 FDD)
According to Mr. Sandless's 2025 Franchise Disclosure Document, the contract liability, net of current, as of December 31, 2024, was $234,000. This figure represents the portion of deferred revenue that Mr. Sandless expects to recognize beyond the next 12 months. It reflects franchise fees already collected for which Mr. Sandless has not yet provided all of the services or fulfilled all the obligations required under the franchise agreement.
For a prospective franchisee, this deferred revenue balance indicates the financial obligations Mr. Sandless has to its existing franchisees. A higher balance could suggest a strong pipeline of new franchise sales or significant unfulfilled service obligations. The decrease in contract liability, net of current, from $360,000 in 2023 to $234,000 in 2024 suggests that Mr. Sandless recognized a portion of its deferred revenue during the year, likely by fulfilling obligations to franchisees.
It's important to note that deferred revenue is a common accounting practice in franchising, as initial franchise fees often cover services provided over the term of the franchise agreement. Reviewing the trend in deferred revenue, alongside franchise sales and service expenses, can provide insights into Mr. Sandless's financial performance and its ability to support its franchisees.
Prospective franchisees should consider this figure in conjunction with other financial metrics and information provided in the FDD to assess the overall financial health and stability of Mr. Sandless. Understanding how Mr. Sandless recognizes revenue and manages its obligations to franchisees is crucial for making an informed investment decision.