When does Best Western have access to the annual dues held in the custodial account?

According to Best Western's 2025 Franchise Disclosure Document, annual dues are established, billed, and payable each year for continuing membership during the succeeding year. Best Western recognizes these annual dues as revenue ratably in the year to which the continuing membership applies. This means that Best Western does not have immediate access to the full amount of annual dues upon payment. Instead, the revenue is recognized proportionally over the course of the year that the membership covers.

For a prospective Best Western franchisee, this revenue recognition method implies that while the franchisee pays the annual dues upfront, Best Western accounts for this payment as revenue gradually throughout the year. This approach is a standard accounting practice that aligns revenue recognition with the period during which the services and benefits of the membership are delivered.

Furthermore, the FDD states that if a member resigns or is terminated, all fees and dues become immediately due and payable per the terms of the applicable contract and are recognized as revenue when cash is received regardless of the term of the contract. This means that Best Western recognizes the remaining balance of the annual dues as revenue immediately upon resignation or termination of the membership, regardless of when the cash was initially received. This policy ensures that Best Western accounts for all outstanding dues in the event of a member's departure from the organization.