For Bens Soft Pretzels, what revenue lines are included on the statement of income and retained earnings?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
Revenue from performance obligations satisfied at a point in time consists of royalties, advertising fund fees, and other income. Each category of revenue has been segregated on the face of the statements of income and retained earnings.
Revenue from performance obligations satisfied over time consists of initial franchise fees. These fees are recognized on a straight-line basis using a mid-month convention over the initial term of the franchise agreement. This revenue is segregated on the face of the statements of income and retained earnings.
The various revenue lines on the statement of income and retained earnings includes income from contracts with customers and from other sources. The income from contracts with customers is either earned at a point in time or over time. Revenues shown on the statement of income and retained earnings for the years ended December 31, 2024, 2023, and 2022, are as follows:
| 2024 | 2023 | } | 2022 | } | ||
|---|---|---|---|---|---|---|
| Amount | % | Amount | % | Amount | % | |
| Revenues | ||||||
| Initial franchise fee revenue | $ 120,792 | 7.32 | $ 147,358 | 9.74 | $ 128,065 | 10.25 |
| Royalty fee revenue | 1,202,010 | 72.79 | 1,064,701 | 70.39 | 877,461 | 70.26 |
| Advertising fund revenue | 243,430 | 14.74 | 232,493 | 15.37 | 190,874 | 15.28 |
| Other income | 84,978 | 5.15 | 68,006 | 4.50 | 52,606 | 4.21 |
| Net sales | 1,651,210 | 100.00 | 1,512,558 | 100.00 | 1,249,006 | 100.00 |
| Operating expenses | 1,333,609 | 80.77 | 1,236,732 | 81.76 | 927,960 | 74.30 |
| Income from operations | 317,601 | 19.23 | 275,826 | 18.24 | 321,046 | 25.70 |
| Other income (expense) | ||||||
| ERC grant income | - | - | - | - | 6,027 | 0.48 |
| Interest income | 4,641 | 0.28 | 2,124 | 0.14 | 17 | - |
| Interest expense | (16,409) | (0.99) | (14,720) | (0.97) | (1,405) | (0.11) |
| Gain on sale of asset | 33,000 | 2.00 | ||||
| Total other income (expense) | 21,232 | 1.29 | (12,596) | (0.83) | 4,639 | 0.37 |
| Income before income taxes | 338,833 | 20.52 | 263,230 | 17.41 | 325,685 | 26.07 |
| State taxes | (573) | (0.03) | (463) | (0.03) | (210) | (0.02) |
| NET INCOME | 338,260 | 20.49 | 262,767 | 17.38 | 325,475 | 26.05 |
| Retained earnings, beginning | 928,302 | 787,113 | 517,522 | |||
| Distributions | (212,385) | (121,578) | (55,884) | |||
| Retained earnings, ending | $1,054,177 | $ 928,302 | $ 787,113 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 46)
What This Means (2025 FDD)
According to Bens Soft Pretzels' 2025 Franchise Disclosure Document, the company's statements of income and retained earnings include several revenue lines. These revenue lines consist of initial franchise fee revenue, royalty fee revenue, advertising fund revenue, and other income. These figures are further broken down in the FDD to show the amounts and percentages for the years 2022, 2023, and 2024. For example, in 2024, initial franchise fee revenue was $120,792 (7.32%), royalty fee revenue was $1,202,010 (72.79%), advertising fund revenue was $243,430 (14.74%), and other income was $84,978 (5.15%).
For a prospective Bens Soft Pretzels franchisee, understanding these revenue streams is crucial. The initial franchise fee revenue reflects the income Bens Soft Pretzels receives from new franchisees joining the system. Royalty fee revenue, the largest portion, represents the ongoing fees franchisees pay based on their gross sales. Advertising fund revenue is collected to support marketing and advertising efforts, while other income may include various miscellaneous sources.
Reviewing these revenue lines over the three years provided (2022-2024) allows potential franchisees to assess the stability and growth of each income source. It's important to note that these figures represent the franchisor's revenue, not the revenue of individual franchise locations. Franchisees should focus on their own potential sales and expenses when evaluating the profitability of a Bens Soft Pretzels franchise.
Additionally, the FDD notes that revenue from contracts with customers is earned either at a point in time (royalties, advertising fund fees, and other income) or over time (initial franchise fees). Initial franchise fees are recognized on a straight-line basis over the initial term of the franchise agreement. This distinction is important for understanding how Bens Soft Pretzels recognizes and reports its revenue.