When is advertising fund fee revenue recognized for Bens Soft Pretzels?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
Advertising Fund Fee Revenue – Franchises are also required to pay the Company ad fund fees based on a percentage of its gross sales, excluding sales tax, pre-approved coupons, and redemption of loyalty rewards. In return for these fees, the Company advertises on behalf of the brand as a whole. Franchises can also apply for reimbursement of general advertising expenses that they directly incur. Revenue is recognized on a weekly basis based on the prior week's sales. A receivable is recorded at year end based on average sales per day for the week that spans year end. The adoption of ASU No. 2014-09 did not result in a change to how advertising fee revenue is recognized. Advertising fund fees are due on a weekly basis.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 Bens Soft Pretzels FDD, advertising fund fee revenue is recognized on a weekly basis, based on the prior week's sales. Bens Soft Pretzels franchises are required to pay ad fund fees based on a percentage of their gross sales, excluding sales tax, pre-approved coupons, and redemption of loyalty rewards. In return for these fees, Bens Soft Pretzels advertises on behalf of the brand as a whole.
For a prospective franchisee, this means that a portion of their weekly gross sales will be allocated to advertising fees, which Bens Soft Pretzels uses for marketing and advertising activities. These fees are recognized as revenue by Bens Soft Pretzels in the same week that the sales occur. Franchisees can also apply for reimbursement of general advertising expenses that they directly incur.
At the end of the year, Bens Soft Pretzels records a receivable for advertising fund fees based on average sales per day for the week that spans year end. This ensures that all advertising revenue earned during the year is properly accounted for, even if payment hasn't been received yet. The FDD notes that the adoption of ASU No. 2014-09 did not result in a change to how advertising fee revenue is recognized.