When does Bb.Q Chicken recognize renewal fees as income?
Bb_Q_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company operates as a Franchisor of B.B.Q Chicken. Franchise revenues principally consist of royalties, as well as marketing fees, which are primarily based on a percentage of franchise revenue. Franchise revenue also includes initial franchise fees, which are recognized as revenue when a substantial performance of franchisor obligation is complete, which is generally when a franchised unit is opened.
Source: Item 23 — RECEIPTS (FDD pages 62–283)
What This Means (2025 FDD)
According to Bb.Q Chicken's 2025 Franchise Disclosure Document, franchise revenues include initial franchise fees, royalties, and marketing fees. Bb.Q Chicken recognizes initial franchise fees as revenue when a substantial performance of franchisor obligation is complete, which is generally when a franchised unit is opened.
While the document specifies when initial franchise fees are recognized, it does not explicitly state when renewal fees (also called successor agreement fees) are recognized as income. The FDD states that to renew the franchise agreement, a franchisee must pay Bb.Q Chicken a successor agreement fee equal to 100% of the then-current initial franchise fee for a single unit franchise.
Because the FDD does not specify when Bb.Q Chicken recognizes renewal fees as income, prospective franchisees should clarify this with the franchisor. Understanding the timing of revenue recognition for these fees can be important for the franchisee's financial planning and accounting.