What was the amount of deferred franchise fee revenue for Pearce Bespoke in 2023?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
rformance obligation of the Company's franchise agreements. The account balances and activity for the years ending December 31 are as follows:
| Deferred Commissions | December 31, 2024 | ||
|---|---|---|---|
| Balance beginning of year | $ | 691,186 | |
| Deferral of franchise sale commissions | 156,000 | ||
| Recognition of franchise sale commissions | (145,502) | ||
| Balance at end of year | $ | 701,684 | |
| Deferred Non-refundable Franchise Fees: | |||
| Balance beginning of year | $ | 1,252,715 | |
| Deferral of non-refund |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the information regarding deferred franchise fees is detailed in Note 2, which discusses the company's accounting policies. Pearce Bespoke defers the recognition of initial franchise fee revenue until it has performed substantially all the initial services required by the franchise agreement. These initial fees are non-refundable and are recognized as revenue over the ten-year term of the franchise agreement.
The FDD includes a table showing the deferred commissions and non-refundable franchise fees. The table provides the balance at the beginning of the year, deferral of fees, recognition of fees, and the balance at the end of the year. The balance of deferred non-refundable franchise fees at the beginning of the year was $1,252,715. During the year, there was a deferral of non-refundable franchise fees of $433,500 and a recognition of non-refundable franchise fees of $872,417. The balance at the end of the year was $813,798.
However, the provided financial data only includes figures for December 31, 2024, and does not specify the deferred franchise fee revenue as of December 31, 2023. A prospective franchisee would need to review the complete audited financial statements for 2023, which are referenced as Exhibit A in the FDD, to determine the exact amount of deferred franchise fee revenue for that year. This information is crucial for understanding the company's revenue recognition practices and financial health.