When is the fixed, non-refundable initial franchise fee due for a Bath Tune Up franchise?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
Initial franchise fees – consist of fees paid by franchisees at the start of the franchise or area development agreement. Each of these fees are fixed and nonrefundable and are due at the time the agreement is entered into. As allowed by ASC 606 and ASC 952 for private companies, preopening services provided to a franchisee are distinct from the franchise license and are recognized as a single performance obligation. This performance obligation is considered complete and revenue recognized typically when the franchisee has completed their initial training which is normally within six months of entering into the agreement. A deferred revenue liability is recorded for deposits of initial franchise fees that have not yet been recognized in Deferred revenue on the Balance Sheets.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 51–52)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, the fixed, non-refundable initial franchise fee is due when the development agreement is entered into or when the franchise agreement is signed. This fee does not generally include a finance component.
Bath Tune Up recognizes revenue from this initial franchise fee upon substantial performance of material contractual obligations, typically after the franchisee completes training. This training usually occurs within six months of entering the agreement. Until the training is complete, the initial franchise fees are recorded as deferred revenue on the balance sheets.
Prospective Bath Tune Up franchisees should note that this initial fee is non-refundable, so careful consideration should be given before signing any agreements. Understanding the specific obligations tied to the fee and the timeline for completing training is crucial. Additionally, franchisees should inquire about the possibility of financing options for the initial franchise fee, even though it generally does not include a finance component.