What do product sales consist of for Bath Tune Up?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisees purchase inventory from certain vendors by placing the order through the Company which is fulfilled by the vendor. The inventory is shipped directly from the supplier to the franchisees and the Company does not bear the inventory risk and is not responsible for fulfilling the orders. Under ASC 606, the Company's performance obligation for product sales is satisfied upon the sale of a vendor's product through the Company's franchisees. As such, revenue is estimated and recorded upon receipt of the franchisee sales information from the vendor. The criteria for the Company acting as a principal in these transactions are not met. Therefore, the Company determined that it acts as an agent in these transactions recording revenue net of costs as the Company is the agent facilitating the transaction between the franchisee and the vendor. In addition, the Company does have a small percentage where inventory is received and then are sold to franchisees. For these transactions the Company is determined as the principal and revenues are not netted with cost.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 51–52)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, franchisees can purchase inventory from certain vendors by placing the order through Bath Tune Up, which is then fulfilled by the vendor. The vendor ships the inventory directly to the franchisees. Bath Tune Up does not bear the inventory risk and is not responsible for fulfilling the orders.
Bath Tune Up's performance obligation for product sales is satisfied upon the sale of a vendor's product through Bath Tune Up's franchisees. Revenue is estimated and recorded upon receipt of the franchisee sales information from the vendor.
Bath Tune Up acts as an agent in these transactions, recording revenue net of costs, as it facilitates the transaction between the franchisee and the vendor. However, in some instances, Bath Tune Up receives inventory and then sells it to franchisees. For these transactions, Bath Tune Up is considered the principal, and revenues are not netted with costs.
In 2022, product sales generated revenue of $192,494, with a cost of product sales amounting to $83,800. For the years ending December 31, 2024 and December 31, 2023, product and other sales generated revenue of $206,378 and $207,153 respectively. The cost of product sales for the corresponding years were $61,171 and $38,689.