How does All Team handle revenue recognition when the price is not fixed?

According to All Team's 2025 Franchise Disclosure Document, the company recognizes revenue when services are provided, there is persuasive evidence of an arrangement, the price is fixed, and collection is reasonably assured, in accordance with ASC 606. This indicates that All Team follows specific accounting standards for revenue recognition. ASC 606 provides a framework for when and how revenue should be recognized, ensuring consistency and comparability in financial reporting.

For a prospective All Team franchisee, this means that revenue from their franchise operations will only be recognized when all these conditions are met: the service has been provided, there's a clear agreement, the price is definitively set, and there's a reasonable expectation that the payment will be collected. If the price is not fixed, All Team cannot recognize the revenue until the price becomes fixed and determinable. This could impact the timing of revenue recognition for franchisees, especially if their pricing arrangements involve variable components or are subject to negotiation.

This policy is important for franchisees to understand because it affects how their financial performance is reported. Franchisees need to ensure their billing and collection practices align with All Team's revenue recognition policy to maintain accurate financial records. Understanding these accounting principles helps franchisees manage their business effectively and interpret their financial statements accurately. Franchisees should seek clarification from All Team regarding specific scenarios where pricing may not be fixed to ensure compliance with the company's accounting practices.

It is common for franchise systems to adhere to specific accounting standards like ASC 606 to ensure uniformity and transparency across all franchise units. This standardization aids in auditing and financial analysis, providing a clear picture of the financial health of both the individual franchise and the entire All Team franchise system. Franchisees should consult with their own financial advisors to fully understand the implications of these policies on their business.