What was the amount of non-refundable deferred franchise fees recognized by Pearce Bespoke in 2024?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
| 60,463 | \$ | (502,101) | \$ | (441,638) |
PEARCE BESPOKE FRANCHISING, LLC STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2024
| 2024 | |
|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |
| Net (loss) | $ (22,237) |
| Adjustments to reconcile net income (loss) to net | |
| cash provided by operating activities: | |
| Amortization expense | 1,010 |
| Recognition of deferred commissions | 145,502 |
| Recognition of non-refundable deferred franchise fees | (872,417) |
| Changes in assets and liabilities | |
| Accounts receivable | (83,157) |
| Deferred commissions | (156,000) |
| Accounts payable and accrued expenses | 32,700 |
| Franchisee payable | 151,944 |
| Non-refundable |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the company recognized $872,417 in non-refundable deferred franchise fees during the year 2024. This figure represents the portion of initial franchise fees that Pearce Bespoke recognized as revenue during that year, as these fees are initially deferred and then recognized over the term of the franchise agreement.
This recognition of deferred revenue is a standard accounting practice in franchising. Initial franchise fees are typically not fully earned when received because the franchisor has ongoing obligations to support the franchisee. By deferring the revenue, Pearce Bespoke adheres to accounting standards that match revenue recognition with the delivery of services and fulfillment of obligations under the franchise agreement.
For a prospective Pearce Bespoke franchisee, this information provides insight into the financial practices of the franchisor. It demonstrates how Pearce Bespoke accounts for initial franchise fees and manages its revenue recognition. Understanding these accounting practices can help franchisees assess the financial stability and transparency of the Pearce Bespoke franchise system.