What was the development fee revenue for Better Blend in the year ended December 31, 2023?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
NESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition (Continued)
The Company's revenue consists of fees from franchised restaurants operated by conventional franchisees. Revenue from conventional franchised restaurants include initial franchise fees, royalties based on percent of sales, marketing fees based on percent of sales, and development fees for locations the franchisee opens in addition to the initial location.
Royalties are collected on a weekly basis and are based on certain percentage as specified on the franchise agreement. Marketing fees are based on up to 1% of gross revenue. The marketing fund is used for marketing expenses related to maximizing public recognition of the Company's brand and marketing fund.
The initial franchise fees collected are determined on a franchisee-by-franchisee basis.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 43)
What This Means (2024 FDD)
Based on the 2024 Better Blend Franchise Disclosure Document, the company's revenue streams include development fees for each additional location a franchisee opens beyond their initial one. While the document mentions that Better Blend collects development fees, it does not explicitly state the total revenue generated from these fees for the year ending December 31, 2023.
The FDD provides a general overview of how Better Blend recognizes revenue, noting that franchise and development fee revenues are recognized when performance obligations are satisfied. It also mentions that the company had ten franchisees under contract and four were operational as of December 31, 2023.
To get a clear picture of the development fee revenue, a prospective Better Blend franchisee should directly ask the franchisor for the specific amount of development fees collected during the year ended December 31, 2023. Understanding this figure is crucial for assessing the financial performance and growth trajectory of the franchise system.