What does Beggars Pizza consider when determining the transaction price for a franchise?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for providing franchisees with the franchise rights to operate a store. To determine the transaction price, the Company considers its customary business practices and the terms of the underlying agreement. For the purpose of determining transaction prices, the Company assumes performance obligations will be satisfied as promised in accordance with franchise agreements and that agreements will not be canceled, renewed or modified. The Company's franchise agreements with franchisees have transaction prices that contain a fixed and variable component. Variable consideration includes revenue related to royalties, as the transaction price is based on the franchisees sales. The variable consideration is recognized based on the actual amounts incurred each month. Franchisees receive additional services such as marketing and commissary needs, which are provided by affiliated entities as allowed by the franchise agreement. Marketing fees totaling 1% of the franchisee weekly sales are paid by franchisees directly to Beg Adv, LLC. Commissary stores at each franchisee are ordered and fulfilled with Begcom, LLC.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the transaction price is the amount the company expects to receive in exchange for granting franchise rights to operate a Beggars Pizza store. To determine this price, Beggars Pizza considers its customary business practices and the terms outlined in the franchise agreement. Beggars Pizza assumes that all performance obligations will be satisfied as promised and that agreements will not be canceled, renewed, or modified when determining transaction prices.
The franchise agreements with Beggars Pizza have both fixed and variable components in their transaction prices. The variable component includes revenue related to royalties, which are based on the franchisee's sales. This variable consideration is recognized based on the actual amounts incurred each month.
In addition to the franchise rights, franchisees receive additional services such as marketing and commissary needs, which are provided by affiliated entities as allowed by the franchise agreement. Specifically, franchisees pay marketing fees totaling 1% of their weekly sales directly to Beg Adv, LLC, and commissary stores are ordered and fulfilled with Begcom, LLC.