Does Antioch Pizza Shop provide assistance with lease negotiation for franchisees?
Antioch_Pizza_Shop Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company is required to allocate the transaction price associated with initial franchise fees between the franchise license and associated performance obligations. In identifying the associated performance obligations, the Company has elected to adopt the practical expedient for private company franchisors outlined in ASC 952- 606, Franchisors—Revenue from Contracts with Customers. In addition, the practical expedient allows franchisors to account for pre-opening services as a single distinct performance obligation, which the Company has elected to adopt. These pre-opening services include the following (which the Company may or may not provide all of):
- Assistance in the selection of a site
- Assistance in obtaining facilities and preparing the facilities for their intended use, including related financing, architectural, and engineering services, and lease negotiation
- Training of the franchisee's personnel or the franchisee
- Preparation and distribution of manuals and similar material concerning operations, administration, and record keeping
- Bookkeeping, information technology, and advisory services, including setting up the franchisee's records and advising the franchisee about income, real estate, and other taxes about local regulations affecting the franchisee's business
- Inspection, testing, and other quality control programs
In determining the allocation of transaction price (the initial franchise fee) to either the license or to the preopening services, the Company has determined that the standalone selling price of its pre-opening services exceeds the initial franchise fee received; as such, the Company allocates the entire initial franchise fees to those preopening services. The franchise fees are then recognized as revenue when those pre-opening services have been completed (which generally occurs upon commencement of the associated franchised location's operations).
Source: Item 21 — Financial Statements (FDD page 56)
What This Means (2025 FDD)
According to Antioch Pizza Shop's 2025 Franchise Disclosure Document, pre-opening services that Antioch Pizza Shop may or may not provide to franchisees include assistance in obtaining facilities and preparing the facilities for their intended use, including related financing, architectural, and engineering services, and lease negotiation.
Antioch Pizza Shop allocates the entire initial franchise fees to these pre-opening services because the standalone selling price of its pre-opening services exceeds the initial franchise fee received. The franchise fees are recognized as revenue when these pre-opening services have been completed, which generally occurs upon commencement of the associated franchised location's operations.
This means that Antioch Pizza Shop may provide assistance with lease negotiation as part of its pre-opening services. However, it is not guaranteed, and the extent of the assistance may vary. A prospective franchisee should confirm with Antioch Pizza Shop what specific pre-opening services they will receive, including the level of support in lease negotiation, to fully understand the support provided before signing the franchise agreement.