How does Benjamin Franklin Plumbing recognize rebates received from third-party vendors?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
ber 31, 2024, 2023 and 2022, respectively, in other revenues on the consolidated statements of operations.
Obligations arising for returns, refunds, and other assurance warranties are infrequent and are not significant to the consolidated financial statements for the years ended December 31, 2024, 2023 and 2022.
Revenue is recognized net of any taxes collected from customers which are subsequently remitted to taxing authorities. These taxes are recorded as a liability when the amounts are billed
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, rebates from third-party vendors are recognized as revenue as they become due, typically on a monthly basis. These rebates are provided in return for Benjamin Franklin Plumbing maintaining a buying program that connects the vendors with the company's franchisee customers. The rebates are calculated as a percentage of third-party sales. For the years ended December 31, 2024, 2023 and 2022, the company recognized $11,177, $15,723 and $15,906 of rebates in other revenue on the consolidated statements of operations.
This means that a portion of Benjamin Franklin Plumbing's revenue is directly tied to these rebate programs. As a franchisee, understanding how these rebates are structured and calculated is important, as it can impact the overall profitability of the franchise. The franchisor's ability to maintain and negotiate favorable rebate agreements with vendors can be a significant benefit to franchisees.
It's worth noting that in a separate section, the 2025 FDD also mentions that rebates are recognized both as revenue and as a reduction of expense. Specifically, for the years ended December 31, 2024, 2023 and 2022, the company recognized $11,438, $16,023 and $16,208 of rebates in other revenue and $1,618, $1,842 and $1,926 of rebates in residential service expenses. This dual recognition suggests that rebates may offset certain operational costs, further enhancing profitability.
Prospective franchisees should inquire about the specific details of these rebate programs, including the vendors involved, the percentage of sales used for calculation, and any conditions or requirements for participation. Understanding these factors will help in assessing the potential financial benefits of the franchise and the effectiveness of Benjamin Franklin Plumbing's vendor relationships.