For Precision Door Service, what was the balance of deferred revenue at the beginning of 2023?
Precision_Door_Service Franchise · 2025 FDDAnswer from 2025 FDD Document
n related to sale-based royalties, synthetic royalties, license fees and advertising. The other deferred revenues not related to the franchise agreements are included in current deferred revenue.
The components of the change in deferred revenue are as follows:
| For the years ended December 31, | 2023 | 2022 | ||
|---|---|---|---|---|
| Balance at beginning of period | $ | 68,226 | $ | 62,393 |
| Fees received from franchise owners | 47,447 | 24,518 | ||
| Franchise sales revenue recognized | (36,783) | (13,642) | ||
| Contributed from Manager | 4,386 | - | ||
| Other deferred revenue recognized | 531 | (5,043 ) | ||
| Balance at end of period | 83,807 | 68,226 | ||
| Less: current portion | 13,631 | 10,604 | ||
| Deferred revenue, noncurrent | $ | 70,176 | $ | 57,622 |
Notes to Combined Financial Statements ($000's)
Revenue deferred as of December 31, 2022 and recognized in the year ended December 31, 2023 was $10,385. Revenue deferred as of December 31, 2021 and recognized in the year ended December 31, 2022 was $16,912.
As of December 31, 2023, the deferred revenue expected to be recognized for each of the next five years, and in the aggregate, is as follows:
| -- | -- | -- | --------------------------- | -- |
|---|
| 2024 2025 2026 2027 2028 Thereafter | $ 13,631 11,053 10,857 10,547 9,973 27,746 |
|---|---|
| $ 83,807 |
Direct, incremental selling expenses are reimbursed by the Company to the Manager. Such costs paid when the franchise agreement is executed are recorded as a contract asset by the Company and amortized over the life of the agreement consistent with the recognition of the deferred revenue.
Source: Item 21 — Financial Statements (FDD page 91)
What This Means (2025 FDD)
According to Precision Door Service's 2025 Franchise Disclosure Document, there are two different balances for deferred revenue at the beginning of 2023, depending on which set of financial statements are being referenced. One set of figures shows a balance at the beginning of the period (2023) of $68,226. Another set of figures shows a balance at the beginning of the period (2023) of $80,364.
Deferred revenue typically represents payments Precision Door Service has received for goods or services that have not yet been fully provided or earned. This can include initial franchise fees or other advance payments. The recognition of these amounts as revenue is deferred until the obligations are met.
For a prospective Precision Door Service franchisee, understanding deferred revenue is crucial because it reflects the company's financial obligations to its franchisees. A higher deferred revenue balance might indicate a strong pipeline of new franchise agreements or significant unfulfilled service obligations. Reviewing the notes to the financial statements can provide additional details on the nature of these deferred revenues and how they are recognized over time.