What was the total amount of deferred revenue, net of current, for Mr. Sandless at the end of 2022?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
| ASSETS | ||
|---|---|---|
| YEARS ENDED DECEMBER 31 | ||
| 2022 | 2021 | |
| Current Assets | ||
| Cash | $ 8,760 | $ 17,509 |
| Accounts receivable | 45,783 | 47,364 |
| Inventory | 11,865 | — |
| Prepaid expenses | — | 5,410 |
| Due from related party | 82,500 | 110,000 |
| Total Current Assets | 148,908 | 180,283 |
| Property and Equipment-net | 7,290 | 19,944 |
| Security deposit | 2,000 | 2,000 |
| Total Assets | $ 158,198 | $ 202,227 |
| LIABILITIES AND MEMBERS' (DEFICIT) | ||
| Current Liabilities | ||
| Accounts payable and accrued expenses | $ 144 | $ 1,115 |
| Due to related party | 300 | 14,224 |
| Deferred revenue | 62,270 | 50,270 |
| 62,714 | 65,609 | |
| Deferred revenue, net of current | 298,540 | 212,810 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 41–42)
What This Means (2025 FDD)
According to Mr. Sandless's 2025 Franchise Disclosure Document, the deferred revenue, net of current, for the company at the end of 2022 was $298,540. This figure represents the portion of franchise fees that Mr. Sandless has received but not yet recognized as earned revenue.
Deferred revenue typically arises from non-refundable franchise fees that are recognized over the life of the franchise agreement. Instead of recognizing the entire franchise fee as revenue immediately upon receipt, Mr. Sandless recognizes it gradually over the term of the agreement. This accounting practice aligns with Financial Accounting Standards Board (FASB) standards for revenue recognition.
For a prospective Mr. Sandless franchisee, this deferred revenue balance indicates the financial obligations Mr. Sandless has to its franchisees in terms of providing ongoing services and support. It also reflects the company's commitment to fulfilling its contractual obligations over the long term. The net deferred revenue provides a clearer picture of long-term liabilities after accounting for current portions.