When are Bft's marketing fund expenses recognized?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisees are required to pay marketing fees of 2% of their gross sales. The marketing fees are collected by the Company on a monthly basis and are to be used for the advertising, marketing, market research, product development, public relations programs and materials deemed appropriate to benefit brands. The Company's promise to provide the marketing services funded through the marketing fund is considered a component of the Company's performance obligation to grant the franchise license. The Company bills and recognizes marketing fund fees as revenue each month as gross sales occur. Marketing fund expenses are recorded as incurred, which may not occur in the same period as the recognition of franchise marketing fund revenue.
Marketing fund expense – Marketing fund expenses are recognized as incurred.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, marketing fund expenses are recognized as incurred. This means that Bft records the expenses when they actually happen, not necessarily when the franchise marketing fund receives the revenue from franchisees.
Franchisees are required to pay marketing fees of 2% of their gross sales, which Bft collects monthly. These fees are intended for advertising, marketing, market research, product development, and public relations programs. Bft considers the provision of these marketing services as part of its obligation in granting the franchise license. The revenue from these marketing fees is recognized each month as gross sales occur.
The FDD clarifies that the timing of revenue recognition for marketing fund fees may differ from when the actual marketing expenses are recorded. Bft may incur these expenses in a different period than when the corresponding revenue is recognized. For example, Bft may collect marketing fees in one month but not spend those funds until a later month or year.
This accounting practice is important for prospective franchisees to understand because it affects how the marketing fund's financial performance is reported. While franchisees contribute a percentage of their gross sales to the fund, the expenses may not directly correlate with those contributions in the same period. Franchisees who want a detailed breakdown of the fund's financials can request an annual accounting of the fund 120 days after the fiscal year's end.