What is the duration of the beverage sales and promotion agreement that Bens Soft Pretzels signed in 2024?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
e on a weekly basis.
December 31, 2024, 2023, and 2022
NOTE 2 – REVENUE RECOGNITION (CONTINUED)
Revenue recognition (continued)
Other Income – This category of income includes rebates from beverage vendors, design fees, additional training fees, management fees, and registration fees and sponsorships for the owners' convention. Income is recognized based on when the services are provided at an amount expected to be received in exchange for these services. In 2024, the Company signed a 5-year beverage sales and promotion agreement with a beverage provider which includes a rebate based on gallons/cases purchased. The rebate revenue is recognized when it is earned, based on the purchase of the products covered under this agreement. The contract also provided an initial rebate incentive of $15,000 which was rec
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 FDD, Bens Soft Pretzels signed a 5-year beverage sales and promotion agreement with a beverage provider in 2024. This agreement includes a rebate based on the volume of gallons or cases purchased by franchisees.
As part of this agreement, Bens Soft Pretzels received an initial rebate incentive of $15,000 in 2024. However, this incentive is not fully recognized as income immediately. Instead, $12,000 of this amount is deferred to future years, meaning it will be recognized as revenue over the 5-year term of the agreement. The remaining $3,000 was recognized in 2024.
For a prospective franchisee, this agreement means that a portion of the revenue they generate through beverage sales will contribute to earning rebates for Bens Soft Pretzels. The initial $15,000 rebate incentive is a one-time benefit, but the ongoing rebates based on purchase volume will continue to provide revenue to Bens Soft Pretzels over the 5-year agreement. This type of agreement is common in the franchise industry, as franchisors often negotiate deals with suppliers to benefit from volume discounts or rebates, which can then be shared with franchisees or used to support marketing and other initiatives.