How is variable consideration recognized by Beggars Pizza?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's franchise agreements with franchisees have transaction prices that contain a fixed and variable component. Variable consideration includes revenue related to royalties, as the transaction price is based on the franchisees sales. The variable consideration is recognized based on the actual amounts incurred each month. Franchisees receive additional services such as marketing and commissary needs, which are provided by affiliated entities as allowed by the franchise agreement. Marketing fees totaling 1% of the franchisee weekly sales are paid by franchisees directly to Beg Adv, LLC. Commissary stores at each franchisee are ordered and fulfilled with Begcom, LLC.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, variable consideration, specifically revenue from royalties, is recognized based on the actual amounts incurred each month. The franchise agreements for Beggars Pizza contain both fixed and variable components in their transaction prices. The variable component is tied to royalties, which are based on the franchisee's sales.
Beggars Pizza records royalty revenue as either 5 percent of gross sales or $500 per month, whichever is higher. This revenue is recognized over the term of the franchise agreement as the underlying sales occur. In 2024, royalty revenue was $1,486,410, and in 2023, it was $1,561,237.
In addition to royalties, franchisees also pay marketing fees totaling 1% of their weekly sales directly to Beg Adv, LLC, an affiliated entity. Franchisees also order and fulfill commissary needs through another affiliated entity, Begcom, LLC. These additional services are provided as allowed by the franchise agreement.