Over what period are royalties recognized as income for Beggars Pizza?

According to Beggars Pizza's 2025 Franchise Disclosure Document, royalty revenue is recognized over the term of the respective franchise agreement as the underlying sales occur. This means that Beggars Pizza recognizes royalty income as franchisees make sales throughout the duration of their franchise agreement.

In practical terms, Beggars Pizza does not recognize all royalty revenue upfront. Instead, they recognize it gradually as franchisees generate sales. This approach aligns the recognition of royalty income with the actual performance of the franchise locations. The royalty revenue is based on 5 percent of gross sales or $500 per month, whichever is higher.

This method of revenue recognition is a common practice in the franchise industry, as it reflects the ongoing relationship between the franchisor and franchisee. It also provides a more accurate picture of Beggars Pizza's financial performance over time, as it smooths out fluctuations in royalty income that may occur from month to month or year to year.