What are the primary sources of revenue for Beggars Pizza?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
be recognized as an expense in future reporting periods as the printed menus are received by the Company.
Revenue Recognition – The Company's revenue mainly consists of franchise fees and royalties. The Company sells individual franchisees the right to operate a Beggars Pizza location within a defined territory using the franchise brand name.
Initial franchise fees are $25,000 for a restaurant with 150 or fewer seats and $40,000 for a restaurant with more than 150 seats. The Company offers a 50 percent franchise fee discount to a franchisee that opens a second store. This fee is due and nonrefundable upon signing the franchise agreement. The initial nonrefundable franchise fees, which are collected in advance, are recognized as revenue at a point in time franchisee opens their location, or upon termination of such agreement. At the expiration of a franchise agreement, a renewal fee ranging from 10 to 33 percent of the initial franchise fee is due and recognized at a point in time when services related to the renewal agreement are completed. For the years ended December 31, 2024 and 2023, initial franchise fees included in revenue was $8,250 and $28,250, respectively. Initial franchise fees deferred totaled $25,000 and $25,000 at December 31, 2024 and 2023, respectively.
1. Summary of Significant Accounting Policies (cont'd)
Revenue Recognition (cont'd)
The Company records royalty revenue based on 5 percent of gross sales or $500 per month, whichever is higher, over ti
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the company's main sources of revenue are franchise fees and royalties. Beggars Pizza generates revenue by granting franchisees the right to operate a Beggars Pizza location within a specific territory, utilizing the Beggars Pizza brand name.
Beggars Pizza collects initial franchise fees, which vary depending on the restaurant size: $25,000 for restaurants with 150 or fewer seats and $40,000 for restaurants exceeding that size. A 50% discount on the franchise fee is offered for franchisees opening a second location. These initial fees are nonrefundable and due upon signing the franchise agreement. The revenue from these fees is recognized when the franchisee opens their location or if the agreement is terminated. Renewal fees, ranging from 10% to 33% of the initial franchise fee, are also collected and recognized upon completion of services related to the renewal agreement.
In addition to franchise fees, Beggars Pizza earns royalty revenue, calculated as the higher of 5% of gross sales or $500 per month. This royalty revenue is recorded over the term of the franchise agreement as sales occur. For example, royalty revenue for the years ended December 31, 2024 and 2023, was $1,486,410 and $1,561,237, respectively. Franchisees also pay 1% of their weekly sales as marketing fees directly to Beg Adv, LLC, and cover commissary costs through orders fulfilled by Begcom, LLC, although these payments are not directly reflected as revenue for Beggars Pizza itself.