What was the royalty receivable-contract revenue for Beggars Pizza as of December 31, 2023?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
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 time. Royalty revenue for the years ended December 31, 2024 and 2023, was $1,486,410 and $1,561,237, respectively.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the company recorded royalty revenue of $1,561,237 for the year ending December 31, 2023. Beggars Pizza calculates royalty revenue as the higher of 5% of gross sales or $500 per month.
This royalty revenue is a crucial component of Beggars Pizza's income, derived from its franchisees' sales. The FDD states that royalty receivables are stated at the net collectible amount, reduced by an allowance for credit losses. This indicates that Beggars Pizza accounts for potential uncollectible royalties from franchisees. The allowance for credit losses was $10,000 at the close of both 2023 and 2022.
For a prospective franchisee, this information highlights the ongoing cost of operating a Beggars Pizza franchise (5% of gross sales or $500/month). It also shows that Beggars Pizza actively manages and accounts for potential non-payment of royalties. Understanding how these royalties contribute to the franchisor's revenue is important for assessing the financial health and stability of the Beggars Pizza franchise system.