What accounting principles were used in preparing the Bevaris Alliance financial statements?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
a food delivery system and will assign such contract to franchisees. The Company offers franchises throughout the United States of America and will provide trademarks, services marks, and a system which includes operational and marketing policies, procedures and programs as well as training. The Company was formed on March 15, 2021. Membership interest is summarized as follows:
Member% InterestBenice Shamoon100%
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of presentation. The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America.
Cash consists of cash and money market funds which are considered to be cash or cash equivalents.
Deferred Franchise Development Costs. Costs incurred in connection with the development of the franchise concept, offering documents and operations manuals have been deferred. The costs are being amortized using the straight-line method over the 5-year estimated useful life of the asset. Such amortization will begin when franchise sales commence.
Initial franchise fees and royalties. Initial franchise fee is recognized when the obligations required by the franchise agreement has been substantially performed by the Company which is when the franchisee begins operating the franchised business. Initial franchise fees is $5,000 for the first franchise, $3,750 for the second franchise and $2,500 for each franchise thereafter. Such obligations include, site selection, provision of operations manuals, marketing plans, Company sponsored internet site, initial training, and other services necessary for the franchisee to commence operations. The Company has elected to apply the practical expedient pursuant to ASC 952-606-25-2 in which the pre-opening services provided to the franchisees and specified above are treated as a single performance obligation.
Royalty revenue from franchisees is primarily based on 10.0% of the franchisee's weekly gross sales receipts and is recognized in
Franchimp
BEVARIS ALLIANCE FRANCHUSE STEM, LLC NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
the period in which the related service or sale occurs. In addition to the royalty fee there is a 2% system marketing fee.
The Company contracts directly with each school or location for the services to be provided by the franchisee.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to the 2024 FDD, the financial statements for Bevaris Alliance Franchise System, LLC have been prepared in accordance with accounting principles generally accepted in the United States of America. This means that Bevaris Alliance adheres to a standardized set of guidelines and practices when recording and reporting its financial data. These principles ensure transparency and comparability, making it easier for potential franchisees and other stakeholders to understand the company's financial performance and position.
Specifically, the FDD mentions several accounting policies that Bevaris Alliance follows. Royalty revenue, which is primarily based on 10.0% of the franchisee's weekly gross sales receipts plus a 2% system marketing fee, is recognized in the period when the related service or sale occurs. Advertising costs are expensed as incurred, with costs of $1,230 in 2023 and $3,212 in 2022. Costs related to the sale and development of a franchised location before operations begin are deferred and expensed once the pre-opening obligations are met and revenue is recognized.
Furthermore, the FDD states that the preparation of financial statements requires management to make estimates and assumptions that could affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from these estimates. Bevaris Alliance also defers costs incurred in connection with the development of the franchise concept, offering documents, and operations manuals, amortizing these costs using the straight-line method over a 5-year estimated useful life, beginning when franchise sales commence. Understanding these accounting policies is crucial for prospective franchisees to assess the financial health and reporting practices of Bevaris Alliance.