How does All States M.E.D. recognize franchise revenues?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company recognizes its franchise revenues in accordance with Statement of Financial Accounting Standards ASC 606, which allows that franchise fees from franchise sales be recognized, net of an allowance for uncollectible amounts, if the initial "franchise fee" is distinct from the franchise license. A portion of the initial franchise fee is allocated to certain distinct performance obligations and is recognized as revenue when the Company has determined it has provided substantially all of its material obligations required to recognize revenue related to those distinct performance obligations. Initial franchise fees generally consist of pre-opening services determined by Franchisor that are separate and distinct (typically upfront and not brand specific)
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, the company recognizes franchise revenues in accordance with Statement of Financial Accounting Standards ASC 606. This means that All States M.E.D. recognizes franchise fees from franchise sales, net of an allowance for uncollectible amounts, if the initial "franchise fee" is distinct from the franchise license.
A portion of the initial franchise fee is allocated to certain distinct performance obligations. All States M.E.D. recognizes this revenue when it has determined it has provided substantially all of its material obligations required to recognize revenue related to those distinct performance obligations.
Initial franchise fees generally consist of pre-opening services determined by All States M.E.D. that are separate and distinct, typically upfront and not brand specific. This accounting method ensures that All States M.E.D. recognizes revenue when it has fulfilled its obligations to the franchisee, aligning revenue recognition with the delivery of services and support.