Under what conditions does Beggars Pizza recognize initial franchise fees as revenue?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
es 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, respective
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the company recognizes initial franchise fees as revenue at a specific point in time. The initial franchise fee is $25,000 for a restaurant with 150 or fewer seats and $40,000 for a restaurant with more than 150 seats. Beggars Pizza offers a 50 percent discount on the franchise fee for franchisees opening a second store. This fee is nonrefundable and due upon signing the franchise agreement.
Specifically, Beggars Pizza recognizes these nonrefundable initial franchise fees as revenue when the franchisee opens their location. In the event that the franchise agreement is terminated before the location opens, Beggars Pizza will still recognize the initial franchise fee as revenue at the time of termination.
Renewal fees, which range from 10 to 33 percent of the initial franchise fee, are recognized as revenue when the services related to the renewal agreement are completed. Royalty revenue, on the other hand, is recorded over time, based on 5 percent of gross sales or $500 per month, whichever is higher.