What amount of franchise fees did Bens Soft Pretzels collect?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
each (for a total term of 21 years). Each option to renew includes an additional fee and is considered a separate performance obligation.
The Company recognizes the initial franchise fee on a straight-line basis using a mid-month convention over the initial term of the franchise or license agreement starting with the opening of the location. The opening is considered to take place when the Company has performed substantially all of the initial services required in the franchise or license agreement and when the franchisee or licensee begins to benefit from the rights included in the franchise or license agreement. Incidental items that are immaterial in the context of the contract are recognized as expense.
Royalty Fee Revenue – Franchises are required to pay the Company a royalty fee based on a percentage of its gross sales, excluding sales tax, pre-approved coupons, and redemption of loyalty rewards. 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. Royalty fees are due on a weekly basis.
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 FDD, Bens Soft Pretzels collects initial franchise fees, but the specific total amount of initial franchise fees collected is not disclosed in the provided excerpts. The FDD does detail how Bens Soft Pretzels recognizes initial franchise fee revenue. The company recognizes the initial franchise fee on a straight-line basis over the initial term of the franchise agreement, starting when the location opens. This means the revenue is recognized gradually as the franchisee operates the business. The initial franchise or license agreement is for five years and contains two options to renew for an additional five years each (for a total term of 15 years). Prior to this change in 2018, the initial franchise agreement was for seven years and contained two options to renew for an additional seven years each (for a total term of 21 years). Each option to renew includes an additional fee and is considered a separate performance obligation.
Bens Soft Pretzels's revenue recognition policy also addresses situations where franchisees are allowed to pay the initial franchise fee over time. In these cases, a receivable is recorded for the unpaid portion, but revenue is still recognized according to the straight-line method. The deferred portion of initial franchise fee revenue totaled $332,002 as of December 31, 2024, $300,294 as of December 31, 2023, and $347,652 as of December 31, 2022. This deferral indicates that a portion of the initial franchise fees is collected in installments over a period.
While the FDD excerpts explain the revenue recognition policy and deferred revenue, it does not state the total amount of initial franchise fees collected during the reported periods. A prospective franchisee may want to ask Bens Soft Pretzels for the total initial franchise fees collected for the years 2022, 2023, and 2024 to understand the company's revenue generation from new franchises.