When does Aira Fitness recognize consideration allocated to pre-opening activities included under Accounting Standards Update (ASU) to ASC 606 for Aira Fitness franchisees?

According to Aira Fitness's 2025 Franchise Disclosure Document, the company recognizes consideration allocated to pre-opening activities, which are not brand specific, when the related services have been rendered. These pre-opening activities fall under Accounting Standards Update (ASU) to ASC 606, Franchisors—'Revenue from Contracts with Customers (Subtopic 952-606): Practical Expedient'.

This means that Aira Fitness accounts for revenue from these specific pre-opening services at the point when they complete the service. This accounting practice is in line with the Financial Accounting Standards Board (FASB) update that allows franchisors to treat pre-opening services distinctly from the franchise license under certain conditions.

For a prospective Aira Fitness franchisee, this indicates that the portion of the initial franchise fee allocated to these non-brand-specific pre-opening activities is recognized by Aira Fitness as revenue only after they have delivered those services. The remaining franchisee fee not allocated to pre-opening activities is recorded as Unearned Revenue and will be recognized over the term of the franchise agreement.