Under what accounting standard does Bambu recognize revenues?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company recognizes revenues under the guidance of ASC 606, "Contracts with Customers". The Company's revenue is principally generated through franchise agreements with the Company's franchisees.
Each franchise agreement is comprised of several performance obligations. The Company identifies those performance obligations, determines the contract price for each obligation, 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 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 revenues under the guidance of ASC 606, "Contracts with Customers." Bambu primarily generates revenue through franchise agreements. Each agreement contains several performance obligations. Bambu identifies these obligations, determines the contract price for each, allocates the transaction price, and recognizes revenue when it 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 use Bambu's proprietary methods, techniques, trade dress, trademarks, and logos. Revenues related to the designated territory and intellectual property are continuing monthly royalty fees, which are defined in the franchise agreement as a fixed amount per month. Bambu bills these royalty fees monthly and recognizes them as revenue when earned, considering it a point-in-time revenue.
These revenues are used to continue developing Bambu's brand and franchise system, as well as to provide ongoing support for its franchisees. This accounting method ensures that Bambu recognizes revenue in accordance with established accounting standards, providing a transparent view of its financial performance related to franchise operations.