How are non-NAF advertising expenses recognized by Benjamin Franklin Plumbing in the consolidated statements of operations?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
ELOC Transaction. Refer to Note 11 for further details.
Advertising Costs
The Company administers the NAF funded by the franchisees for which the associated revenue is recognized in franchise service fees on the consolidated statements of operations. The NAF pays for costs of preparing and producing various advertising and
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, non-NAF advertising expenses are recognized as incurred. These expenses are included in both franchise sales expense and franchise support expenses within the consolidated statements of operations.
For the years ending December 31, 2024, 2023, and 2022, the amounts expensed for non-NAF advertising were $3,012, $3,151, and $1,916, respectively. This means that these specific amounts were recorded as expenses in the company's financial statements for those years.
This accounting treatment indicates that Benjamin Franklin Plumbing immediately recognizes the costs of non-NAF advertising rather than capitalizing and amortizing them over a longer period. For a franchisee, this means that the financial statements will reflect these advertising costs in the period they occur, impacting the reported profitability for that period.