What is Bft's performance obligation under the franchise license?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's contracts with customers consist of franchise agreements with franchisees. The Company's revenues primarily consist of franchise license revenues.
Franchise revenue –
The Company enters into franchise agreements for each franchised studio. The Company's performance obligation under the franchise license is granting certain rights to access the Company's intellectual property; all other services the Company provides under the franchise agreement are highly interrelated, not distinct within the contract, and therefore accounted for as a single performance obligation, which is satisfied over the term of each franchise agreement. Those services include initial development, operational training, preopening support and access to the Company's technology throughout the franchise term. Fees generated related to the franchise license include development fees, royalty fees, marketing fees, technology fees and transfer fees, which are discussed further below. Variable fees are not estimated at contract inception, and are recognized as revenue when invoiced, which occurs monthly. The Company has concluded that its agreements do not contain any financing components.
Franchise development fee revenue – The Company's franchise agreements typically operate under ten-year terms with the option to renew for up to two additional five-year successor terms. The Company determined the renewal options are neither qualitatively nor quantitatively material and do not represent a material right. Initial franchise fees are non-refundable and are typically collected upon signing of the franchise agreement. Initial franchise fees are recorded as deferred revenue when received and are recognized on a straight-line basis over the franchise life, which the Company has determined to be ten years, as the Company fulfills its promise to grant the franchisee the rights to access and benefit from the Company's intellectual property and to support and maintain the intellectual property.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, Bft's performance obligation under the franchise license is granting certain rights to access the company's intellectual property. All other services Bft provides under the franchise agreement are highly interrelated, not distinct within the contract, and therefore accounted for as a single performance obligation, which is satisfied over the term of each franchise agreement.
These services include initial development, operational training, preopening support, and access to Bft's technology throughout the franchise term. The fees generated related to the franchise license include development fees, royalty fees, marketing fees, technology fees, and transfer fees. These variable fees are not estimated at the contract inception and are recognized as revenue when invoiced, which occurs monthly.
Bft's franchise agreements typically operate under ten-year terms with the option to renew for up to two additional five-year successor terms. The initial franchise fees are non-refundable and are typically collected upon signing the franchise agreement. These fees are recorded as deferred revenue when received and are recognized on a straight-line basis over the franchise life, which Bft has determined to be ten years, as Bft fulfills its promise to grant the franchisee the rights to access and benefit from Bft's intellectual property and to support and maintain the intellectual property.