When does Baymont Inn Suites recognize non-refundable initial franchise fees as revenue?
Baymont_Inn_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company also receives non-refundable initial franchise fees, which are recognized as revenues over the initial non-cancellable period of the franchise agreement, commencing when all material services or conditions have been substantially performed. This occurs when a hotel opens for business in the Company's system or when a franchise agreement is terminated after it has been determined that the hotel will not open. The Company's standard franchise agreement typically has a term of 10 to 20 years.
Royalties and franchise fee revenues on the Consolidated Statements of Income include initial franchise fees of $22 million, $16 million and $15 million in 2024, 2023 and 2022, respectively.
Source: Item 23 — RECEIPTS (FDD pages 97–443)
What This Means (2025 FDD)
According to Baymont Inn Suites's 2025 Franchise Disclosure Document, the company recognizes non-refundable initial franchise fees as revenue over the initial non-cancellable period of the franchise agreement. This recognition begins when all material services or conditions have been substantially performed.
For Baymont Inn Suites, this substantial performance typically occurs when a hotel opens for business within the franchise system. It can also occur if a franchise agreement is terminated after a determination that the hotel will not open. The standard franchise agreement for Baymont Inn Suites generally spans a term of 10 to 20 years.
In 2024, 2023 and 2022, Baymont Inn Suites reported initial franchise fees of $22 million, $16 million, and $15 million respectively on their Consolidated Statements of Income.