Over what period does Beggars Pizza recognize income for royalties?

According to Beggars Pizza's 2025 Franchise Disclosure Document, the company recognizes royalty income over the term of the respective franchise agreement as the underlying sales occur. This means that Beggars Pizza does not recognize all royalty income upfront. Instead, it recognizes the income as the franchisee makes sales throughout the duration of their franchise agreement.

For a prospective franchisee, this accounting practice means that Beggars Pizza's reported royalty revenue in their financial statements reflects the ongoing sales performance of its franchisees. The royalty revenue is based on 5 percent of gross sales or $500 per month, whichever is higher. This provides a more accurate representation of the company's financial health and stability, as it directly correlates with the success and sales volume of its franchise locations.

This method of revenue recognition is a common practice in the franchise industry, as it aligns the franchisor's income with the franchisee's performance over time. It also ensures that the franchisor's financial statements accurately reflect the value they provide to franchisees throughout the term of the agreement. Franchisees should understand that this revenue recognition method is tied to the franchise agreement's term, highlighting the importance of understanding the agreement's length and conditions.