Over what period does Beehive Homes recognize initial franchise fees as earned revenue?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
AND FRANCHISE ROYALTY
- 4.1. Initial Franchise Fee. Franchisee hereby promises and agrees to pay to Franchisor an initial franchise fee (the "Initial Franchise Fee") of Seventy-Five Thousand Dollars ($75,000.00), payable one-third upon signing of this Agreement and the balance in full upon the earlier to occur of the following: (i) the funding of any construction loan for the Home; or (ii) the issuance of a building permit for the Home. The Initial Franchise Fee is fully earned and nonrefundable as and when paid as consideration for the expenses incurred by Franchisor in furnishing assistance and service to Franchisee and for Franchisor's lost or deferred opportunity to franchise to others. If the Franchise Fee is not paid in full on or before the date which is one year after the Effective Date of this Agreement, Franchisor may, in its sole discretion, terminate this Agreement, and no fees will be refunded to Franchisee.
- 4.2. Initial Franchise Fee for Additional Franchises. Franchisees in good standing and all of whose franchised Homes are open and operating may acquire additional franchises by paying the then current franchise fee for each additional franchise offered by Franchisor, subject to approval by the Franchisor. The current franchise fee for each additional franchise is Fifty Thousand Dollars ($50,000.00), payable in full upon the execution of a franchise agreement for the additional franchise and is fully earned and nonrefundable upon payment. This current fr
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, the company recognizes initial franchise fees as earned revenue as and when they are paid. The initial franchise fee is $75,000 for the first franchise. For franchisees in good standing who are acquiring additional franchises, the fee is $50,000 for each additional franchise.
The FDD specifies that one-third of the initial franchise fee is payable upon signing the agreement, with the balance due upon the earlier of the funding of any construction loan for the home or the issuance of a building permit for the home. The initial franchise fee is fully earned and nonrefundable when paid, as it covers the expenses Beehive Homes incurs in providing assistance and service to the franchisee, as well as the franchisor's lost or deferred opportunity to franchise to others.
If the franchise fee is not paid in full within one year after the effective date of the agreement, Beehive Homes has the discretion to terminate the agreement, and no fees will be refunded to the franchisee. This policy of recognizing revenue upon payment is a standard accounting practice, reflecting that Beehive Homes has fulfilled its initial obligations once the payment is received and the services related to the franchise setup are rendered.