When are the initial franchise fees 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 agreement, area development fees, and renewal fees. The fixed non-refundable fee, as determined by the signed development and/or franchise agreement, is due at the time the development agreement is entered into, and/or when the franchise agreement is signed, and generally does not include a finance component. Initial franchise fees are made up of performance obligations for training, access to plans, access to vendors and Company specific pricing, area exclusivity, and the right to use the Company's intellectual property over the term of the agreement. Initial franchise fee revenue is recognized upon substantial performance of material contractual obligations as set forth in the development and/or franchise agreement, typically the completion of training. Deferred revenue consists of deposits for franchise fees in which substantial performance of material obligations has not been achieved.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 51–52)
What This Means (2025 FDD)
According to the 2025 Bath Tune Up FDD, the initial franchise fee is due when the development agreement is entered into or when the franchise agreement is signed. The FDD specifies that these fees are fixed and non-refundable.
The initial franchise fee covers several performance obligations by Bath Tune Up, including training, access to plans and vendors, company-specific pricing, area exclusivity, and the right to use Bath Tune Up's intellectual property during the agreement term. Revenue from these initial franchise fees is recognized once Bath Tune Up has substantially performed its contractual obligations, which typically means the franchisee has completed their training.
Deposits received for franchise fees are recorded as deferred revenue until the obligations are fulfilled. This means that while Bath Tune Up receives the initial fee upfront, it doesn't recognize the revenue for accounting purposes until it has provided the services and support associated with the fee, such as completing the franchisee's training.