What was the ending balance of deferred commissions for Pearce Bespoke as of December 31, 2024?
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 fran |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the balance of deferred commissions at the end of the year, specifically December 31, 2024, was $701,684. This figure represents the amount of franchise sale commissions that Pearce Bespoke has deferred recognizing as revenue. These commissions are not immediately recognized as income but are instead recognized over the life of the franchise agreement.
The deferred commissions increased during 2024. The beginning balance of deferred commissions was $691,186. During the year, Pearce Bespoke deferred $156,000 in franchise sale commissions. However, they also recognized $145,502 of franchise sale commissions. The net effect of these deferrals and recognitions resulted in the ending balance of $701,684.
For a prospective Pearce Bespoke franchisee, understanding deferred revenue is crucial because it reflects the financial health and accounting practices of the franchisor. The deferred commissions are incremental costs of the franchise agreement and are recognized as expenses over the life of the franchise agreement. This accounting treatment aligns with the principle of matching revenues and expenses, providing a more accurate picture of Pearce Bespoke's financial performance over time.