When are revenues for B Bops franchise fees recognized?

According to B Bops's 2025 Franchise Disclosure Document, revenues from franchise fees are recognized at a specific point in time. This occurs generally upon an oral or written agreement for a franchise contract. At this point, the right to use the franchise license is transferred to the customer. This means that B Bops recognizes the revenue as soon as the agreement is made and the franchisee gains the right to operate under the B Bops brand.

In addition to franchise fees, B Bops also recognizes revenue from royalty income. This revenue is recognized over time, specifically on a monthly basis. The royalty income is based on a percentage, 5%, of the gross sales of the franchise. This income is recognized as it is earned, according to the franchise agreement.

Management exercises judgment in determining when the performance obligations for goods have been satisfied. This implies that there might be some subjectivity in the exact timing of revenue recognition, although it is generally tied to the agreement date. For a prospective franchisee, this means that B Bops recognizes the initial franchise fee as revenue relatively early in the process, which could impact the company's financial statements and reported profitability.