How does Bambu recognize revenue from continuing monthly royalty fees?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
When a qualified party purchases a Bambu franchise, the Company grants the franchisee the right to operate the franchised business in a designated territory and to use the proprietary methods, techniques, trade dress, trademarks, and logos ("symbolic intellectual property" or "IP"). Revenues related to the designated territory and IP are continuing monthly royalty fees are defined in the franchise agreement and are fixed amount per month. Revenue from continuing monthly royalty fees is billed monthly and is recognized as revenue when earned as a point in time revenue. These revenues will be used to continue the development of the Company's brand, the franchise system and provide on-going support for the Company's franchisees.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, the company recognizes revenue from continuing monthly royalty fees when earned. These fees are a fixed amount per month, billed monthly, and recognized as revenue at a point in time. Bambu states that this revenue is used to continue developing the brand and franchise system, as well as to provide ongoing support to franchisees.
Each franchise agreement is comprised of several performance obligations. Bambu identifies these obligations, determines the contract price for each, allocates the transaction price to each performance obligation, and recognizes revenue when the company has satisfied the performance obligation by transferring control of the good or service to the franchisee.
When a franchisee purchases a Bambu franchise, they are granted the right to operate the franchised business in a designated territory and to use Bambu's proprietary methods, techniques, trade dress, trademarks, and logos. The revenues related to the designated territory and intellectual property are the continuing monthly royalty fees.