What does Angry Chickz consider to be the identified performance obligations for each contract?

Revenue recognition – The Company records revenue under FASB ASC Topic 606, Revenue from Contracts with Customers (Topic 606), which requires revenue to be recorded as the transfer of promised goods or services to customers in an amount that reflects the consideration to which the reporting entity expects to be entitled in exchange for those goods or services. The Company analyzes each contract for separate performance obligations existing over the term of the contract and recognizes revenue as those performance obligations are satisfied. As part of its assessment of each franchise contract, the Company evaluates certain factors including the customer's ability to pay, or credit risk. For each contract, the Company considers the promise to fulfill services, each of which is distinct to be the identified performance obligations. The Company has the following revenue streams:

Royalty revenue – Royalty revenues represent royalties earned from each of the franchisees in accordance with the franchise disclosure document and the franchise agreement for use of the Angry Chickz name, menus, processes, and procedures. The royalty rate in the franchise agreement is up to seven percent of the gross sales of each restaurant operated by each franchisee. Royalty fee revenue from franchised restaurants is recognized in the period earned and is payable to the Company weekly or monthly when the sales are reported by the franchisees.

Brand fund revenue – Brand fund revenues represent payments made by the franchisee to the Company for the brand development fund (Brand Fund) in accordance with the franchise disclosure document, and the franchise agreement. The Brand Fund fee rate is up to 2% of the gross sales of each restaurant operated by each franchisee. Brand Fund revenue is recognized weekly or monthly, while expenditures will be included in advertising expenses. Expenditures of the Brand Fund will primarily be amounts paid to third parties but may also include personnel expenses and allocated costs from the Member.

Franchise fee revenue – The franchise arrangement between the Company and each franchise owner of an Angry Chickz restaurant is documented in the form of a franchise agreement and, in certain cases, an area development agreement. The franchise arrangement requires the Company as franchisor to perform various activities to support the Angry Chickz brand and does not involve the direct transfer of goods and services to the franchise owner as a customer. Activities performed by the Company are highly interrelated with the franchise license and AC IP and are considered to represent a single performance obligation, which is the transfer of the franchise license and intellectual property. The nature of the Company's promise in granting the franchise arrangement is to provide the franchise owner with access to the brand's intellectual property over the term of the franchise agreement.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)