How does Beehive Homes recognize revenue from royalties from homes operated by franchisees?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
expenses as incurred. Accounting Standards Codification Topic 606 under U.S. GAAP (ASC 606) provides that revenues are to be recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration expected to be received for those goods or services. The standard does not change the recognition of royalties from homes operated by franchisees, which are recognized at the time the underlying sales occur. The standard does change the timing in which the Company recognizes initial fees.
The Company's primary revenue streams are from initial franchise fees and monthly royalty fees charged to franchise owners. Royalty fees are based on a percentage of gross receipts collected by the franchisees and will fluctuate directly with the level of sales generated by franchisees. Franchise fees are one-time payments at the initiation of a franchise agreement and can vary greatly from year-to-year depending on the number of franchised locations that are opened.
The Company derives revenue from nonrefundable transfer fees, which are charged to existing franchisees when they want to transfer their franchise license to another franchisee. The nonrefundable transfer fee is reimbursement to the Company for legal, accounting, credit, and investigation expenses incurred in support of facilitating the transfer. These fees are earned and recognized at the time of the transfer.
Franchise revenues consist of the following:
| 159. | Dennis McGraw 409 South 300 West, Santaquin, Utah 84653 | 801-360-4118 |
|---|---|---|
| 160. | Michelle Ketcher 3430 West 11400 South, South Jordan, Utah 84655 | 801-860-4943 |
| 161. | Dennis McGraw 858 East 100 South, Spanish Fork, Utah 84660 | 801-360-4118 |
Note C – Long-Term Debt
Long-term debt consisted of the following at December 31:
| 163. | Dan Steurer / Chad Szymanski | ||
|---|---|---|---|
| 1555 West 1170 North, St. George, Utah 84770 | 928-660-0681 | ||
| 164. | Joel & Shauna Horne | 2041 South Mesa Palms, St. George, Utah 84770 | 435-619-0499 |
| 165. | Joel & Shauna Horne | 2041 South Mesa Palms #B, St. George, Utah 84770 | 435-619-0499 |
| 166. | Joel & Shauna Horne | 2397 S. River Road, St. George, Utah 84770 | 435-619-0499 |
| 167. | Greg & Aimee Poe | 1407 South 2000 West, Syracuse, Utah 84075 | 801-589-3895 |
| 168. |
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes's 2025 Franchise Disclosure Document, the company recognizes royalties from homes operated by franchisees at the time the underlying sales occur. This means that Beehive Homes accounts for royalty revenue when the franchisee makes the sales that generate those royalties.
The document specifies that royalty fees are based on a percentage of gross receipts collected by the franchisees. These fees will fluctuate directly with the level of sales generated by franchisees. This arrangement aligns the franchisor's revenue with the franchisee's sales performance, incentivizing Beehive Homes to support franchisee success.
Franchisees are required to pay the Franchise Royalty monthly, specifically on or before the 10th day of each calendar month. This payment is based upon the Gross Revenues of the preceding calendar month. To facilitate this, franchisees must provide Beehive Homes with a Monthly Revenues Report detailing the financial activity of the Home for the preceding month, including Gross Revenues and other financial information. A late charge of $100.00 is assessed for each Monthly Revenues Report which is not timely filed. Additionally, if the Franchisee fails to pay any Franchise Royalty when due, Franchisee shall be assessed a one-time late charge equal to the lesser of ten percent (10%) of the Franchise Royalty due or, if less, the maximum late charge assessable under the laws of the state in which the Home is located.