How does Amorino generally derive its revenues?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company generally derives its revenues through conventional franchise arrangements that provide for payment of an initial fee. Under the franchise agreement, franchisees are granted certain rights and certain services will be provided. Franchisees have the right to operate a store or outlet using Amorino's trademarks, branding, and systems. Franchisees are also provided training and initial startup support under the agreement. In accordance with the guidance of ASC-952 "Franchisors", the Company has made an accounting policy election to account for all of the above services provided and rights granted as a single performance obligation. Initial fees are recognized as the Company satisfies the performance obligation over the franchise term, which is generally ten years for retail stores and five years for mobile outlets. Over the term of the agreement, franchisees are permitted to purchase ingredients and supplies from the affiliate.
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to Amorino's 2025 Franchise Disclosure Document, the company primarily generates revenue through conventional franchise arrangements. These arrangements involve franchisees paying an initial fee to gain the right to operate a store or outlet using Amorino's trademarks, branding, and systems. As part of the agreement, Amorino provides franchisees with training and initial startup support.
Amorino recognizes initial fees as revenue over the franchise term, which is typically ten years for retail stores and five years for mobile outlets. This means that the initial fee paid by the franchisee is not recognized as immediate income but is instead spread out over the duration of the franchise agreement. Additionally, franchisees have the option to purchase ingredients and supplies from Amorino's affiliate throughout the term of the agreement, which contributes to Amorino's revenue stream.
This revenue model is common in the franchise industry, where franchisors often derive income from initial franchise fees, ongoing royalties, and the sale of goods and services to franchisees. For a prospective Amorino franchisee, understanding this revenue model is crucial as it highlights the importance of the initial franchise fee and the ongoing relationship with Amorino for supplies and support.