What is Basecamp Fitness's primary performance obligation under the franchise agreement?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's primary performance obligation under the franchise agreement is granting certain rights to use the Company's intellectual property over the term of each agreement. The Company has certain pre-opening services, including training and construction management, that are provided as part of the franchise agreement. These pre-opening activities are considered distinct from the franchise license and are therefore recognized upon opening of the franchise. The Company has elected the FASB's practical expedient related to pre-opening activities and does not analyze each separate activity as its own distinct performance obligation. The franchise fees remaining after any pre-opening performance obligations have been satisfied are recognized on a straight-line basis over the term of the respective agreement.
Source: Item 23 — RECEIPTS (FDD pages 62–248)
What This Means (2025 FDD)
According to Basecamp Fitness's 2025 Franchise Disclosure Document, the company's primary performance obligation under the franchise agreement is granting franchisees the rights to use Basecamp Fitness's intellectual property throughout the term of the agreement. This means that Basecamp Fitness allows franchisees to operate under its brand, utilize its trademarks, and implement its business model.
Basecamp Fitness also provides certain pre-opening services, such as training and construction management, as part of the franchise agreement. However, these pre-opening activities are considered distinct from the franchise license and are recognized upon the opening of the franchise. Basecamp Fitness has elected a practical approach related to these pre-opening activities and does not analyze each separate activity as its own distinct performance obligation.
Franchise fees remaining after any pre-opening performance obligations have been satisfied are recognized on a straight-line basis over the term of the respective agreement. This indicates that the revenue from the franchise fee is recognized evenly over the life of the franchise agreement, reflecting the ongoing value of the intellectual property and brand usage provided to the franchisee.