How does Bens Soft Pretzels recognize income from rebates from beverage vendors?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
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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 recognizes income from rebates from beverage vendors as part of "Other Income." This category also includes design fees, additional training fees, management fees, and registration fees and sponsorships for the owners' convention. Bens Soft Pretzels recognizes this income when the services are provided, based on the amount expected to be received for those services.
In 2024, Bens Soft Pretzels entered into a 5-year beverage sales and promotion agreement with a beverage provider. This agreement includes a rebate based on the volume of gallons/cases purchased. The rebate revenue is recognized when it is earned, based on the purchase of the products covered under the agreement.
The agreement also provided an initial rebate incentive of $15,000, which was received in 2024. However, Bens Soft Pretzels does not recognize the entire $15,000 immediately. Instead, $12,000 of this amount is deferred to future years, meaning it will be recognized as income over the remaining term of the 5-year agreement. This deferral indicates that only $3,000 of the initial incentive was recognized as income in 2024, with the remaining portion spread out over the subsequent years.