For Bens Soft Pretzels, how often are royalties and advertising fund fees billed?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
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 Bens Soft Pretzels' 2025 Franchise Disclosure Document, both royalty fees and advertising fund fees are due on a weekly basis. Bens Soft Pretzels franchises are required to pay a royalty fee based on a percentage of their gross sales, excluding sales tax, pre-approved coupons, and redemption of loyalty rewards. Similarly, franchisees must pay advertising fund fees, also based on a percentage of gross sales (excluding the same items), which Bens Soft Pretzels uses to advertise the brand.
For a prospective franchisee, this weekly billing cycle means that cash flow management is crucial. Franchisees must ensure they have sufficient funds available each week to cover these fees, which are calculated based on the prior week's sales. This contrasts with some franchises that might bill royalties or advertising fees monthly or quarterly, offering more flexibility in cash flow.
The FDD also notes that Bens Soft Pretzels recognizes revenue from these fees on a weekly basis, based on the prior week's sales. At year-end, a receivable is recorded based on average sales per day for the week that spans the year-end, indicating a consistent and structured approach to revenue recognition and fee collection. This weekly billing and revenue recognition process provides Bens Soft Pretzels with a steady and predictable income stream, while requiring franchisees to maintain diligent financial practices.