When are convention attendance and sponsorship fees recognized as revenue for 360 Painting?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
Other revenues consist primarily of rebates and convention attendance and sponsorship fees. Rebates received from thirdparty vendors in return for the Company maintaining a buying program that connects the vendors with the Company's franchise customers are recognized as revenue as they become due, which is generally on a quarterly basis. Rebates are calculated as a percentage of third-party sales. Convention attendance and sponsorship fees are recognized at the time of the convention.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, convention attendance and sponsorship fees are recognized as revenue at the time the convention occurs. This means that 360 Painting accounts for these fees as income when the actual event takes place, rather than when the fees are collected or when franchisees register for the convention.
For a prospective 360 Painting franchisee, this information is relevant because it provides insight into how the franchisor recognizes revenue. While this may not directly impact the franchisee's day-to-day operations, understanding the franchisor's accounting practices can offer a clearer picture of the company's financial health and stability. Knowing when and how revenue is recognized can help franchisees assess the franchisor's financial statements and make informed decisions.
This accounting practice is fairly standard. Recognizing revenue at the time of the event aligns with typical accounting principles, which dictate that revenue should be recognized when it is earned. In this case, 360 Painting earns the revenue from convention attendance and sponsorships by hosting the convention and providing the associated benefits to attendees and sponsors.