How does Best Western handle the commission for gift cards redeemed at the property?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
Best Western Travel Card® (a card having no expiration date and no usage or non-usage fees) revenue is recognized when: (i) the Best Western Travel Card is redeemed, or (ii) the likelihood of the Best Western Travel Card being redeemed is remote (Best Western Travel Card breakage), and the Company determines that there is not a legal obligation to remit the unredeemed Best Western Travel Card balance to the relevant jurisdiction. The determination of the Best Western Travel Card breakage rate is based upon Company specific historical redemption patterns. Best Western Travel Card breakage is included in program revenues in the Consolidated Statements of Revenues and Expenses.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, revenue from the Best Western Travel Card® (a gift card) is recognized in one of two scenarios. The first is when the Best Western Travel Card is redeemed by a customer at a Best Western property. The second scenario is when the likelihood of the Best Western Travel Card being redeemed is remote, which Best Western terms "Best Western Travel Card breakage." In this second case, Best Western must determine that there is no legal obligation to remit the unredeemed Best Western Travel Card balance to the relevant jurisdiction.
The determination of the Best Western Travel Card breakage rate is based upon Company specific historical redemption patterns. Best Western Travel Card breakage is included in program revenues in the Consolidated Statements of Revenues and Expenses.
For a prospective franchisee, this means that Best Western tracks and accounts for gift card redemptions and breakage (unredeemed cards) as part of its revenue recognition process. The revenue is recognized either when the card is used at a property or when it's deemed unlikely to be used, provided there's no legal obligation to return the balance. This accounting practice impacts how Best Western reports its financial performance and could influence the overall financial health of the brand.