What factors does Angry Chickz evaluate as part of its assessment of each franchise contract?

According to the 2025 FDD, Angry Chickz evaluates certain factors as part of its assessment of each franchise contract. These factors include the customer's ability to pay and their credit risk. Angry Chickz analyzes each contract for separate performance obligations existing over the term of the contract and recognizes revenue as those performance obligations are satisfied. For each contract, Angry Chickz considers the promise to fulfill services, each of which is distinct to be the identified performance obligations.

This evaluation is part of the revenue recognition process under FASB ASC Topic 606, Revenue from Contracts with Customers. This accounting standard requires Angry Chickz to record revenue as it transfers promised goods or services to customers, reflecting the consideration it expects to receive in exchange. By assessing the customer's ability to pay and credit risk, Angry Chickz aims to ensure that it will receive the revenue it anticipates from each franchise contract.

For a prospective franchisee, this means that Angry Chickz will likely scrutinize their financial background and creditworthiness before awarding a franchise. This is a common practice in franchising, as the franchisor wants to ensure that franchisees are financially stable and capable of meeting their financial obligations under the franchise agreement. Franchisees should be prepared to provide financial statements and other documentation to demonstrate their financial capacity.