What was the total revenue from franchise fees for Bens Soft Pretzels?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
ETZELS FRANCHISING CORPORATION STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Years Ended December 31, 2024, 2023, and 2022
| 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 | |||
| D |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 46)
What This Means (2025 FDD)
According to Bens Soft Pretzels' 2025 Franchise Disclosure Document, the initial franchise fee revenue for 2022 was $128,065, for 2023 it was $147,358, and for 2024 it was $120,792. This revenue represents the income Bens Soft Pretzels Franchising Corporation receives from granting franchisees the right to operate a Bens Soft Pretzels location. The franchise agreement includes the use of the brand's intellectual property, pre-opening training, and ongoing operational support.
For a prospective franchisee, these figures highlight the revenue stream generated by initial franchise fees, which are recognized over the initial term of the franchise agreement. The FDD notes that the initial franchise or license agreement is for five years, with two options to renew for an additional five years each, totaling a possible 15-year term. Before June 2018, the initial agreement was for seven years, with two seven-year renewal options, totaling 21 years.
The document specifies that Bens Soft Pretzels recognizes the initial franchise fee revenue on a straight-line basis, starting when the location opens and the franchisee benefits from the franchise rights. This means the upfront fee is not recognized immediately but spread out over the term of the agreement. The FDD also mentions that a portion of the initial franchise fee revenue is deferred to future periods, with deferred amounts of $332,002 as of December 31, 2024, $300,294 as of December 31, 2023, and $347,652 as of December 31, 2022.
It's important to note that while franchise fees are typically due upon signing the franchise agreement, Bens Soft Pretzels may allow franchisees to pay over time. In such cases, a receivable is recorded for the unpaid portion, and revenue is recognized according to the standard policy. This deferred revenue and the allowance for credit losses, which was $20,000 in 2024, $0 in 2023, and $0 in 2022, could impact the actual cash flow received by Bens Soft Pretzels in any given year.