When does Country Visions, Inc. recognize revenue from Apricot Lane franchise fees?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
ing Principles in the United States of America (U.S. GAAP).
Revenue Recognition
Revenues from franchise fees are recognized when all services specified by the franchise agreement have been performed, generally when the franchisee's store opens. These services generally include site selection, lease negotiation, marketing, training of the franchisee, training of their employees, and store opening assistance. The initial franchise fee for 2024 and 2023 is $39,50
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, Country Visions, Inc. recognizes revenue from franchise fees when all services specified in the franchise agreement have been performed. Generally, this occurs when the franchisee's store opens. These services include site selection, lease negotiation, marketing, training for the franchisee and their employees, and store opening assistance.
For a prospective Apricot Lane franchisee, this means that the initial franchise fee, which was $39,500 in both 2024 and 2023, is not recognized as revenue by Country Visions, Inc. until the franchisee's store is open and operational. This accounting practice aligns with the accrual method of accounting, as stated in the FDD, where revenue is recognized when earned rather than when the cash is received.
Additionally, the franchise fee for additional stores for an existing franchisee was $20,000 in 2024. This fee would also be recognized as revenue upon the fulfillment of the specified services, typically when the additional store opens. This policy ensures that Country Visions, Inc. only recognizes revenue after providing substantial services to the franchisee, which is a common practice in franchising and is compliant with Generally Accepted Accounting Principles (GAAP).