What was the amount of franchise fees collected by Big Blue Swim School in 2024?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company enters into either development rights agreements (''DRAs''), which grant a multi-unit developer the right to develop two or more franchise units pursuant to a franchise agreement or a single franchise agreement, which grants a franchisee the right to open and operate one franchised unit. The Company collected a development fee for the grant of exclusive development rights in a specific territory. The Company collects an initial franchise fee for sales of single-unit franchises. The development rights fees and initial franchise fees are nonrefundable and earned upon execution of the underlying DRA or franchise agreement, in accordance with the respective franchise agreement or DRA. Renewal and transfer fees are payable when an existing franchisee renews the franchise agreement for an additional term or when a transfer to a third party occurs, respectively.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 75)
What This Means (2025 FDD)
According to the 2025 FDD, Big Blue Swim School recognizes revenue from several fees, including development rights fees and initial franchise fees. These fees are nonrefundable and are earned upon the execution of the Development Rights Agreement (DRA) or the franchise agreement. Renewal and transfer fees are collected when a franchisee renews their agreement or transfers it to a third party. The FDD does not, however, state the total amount of franchise fees Big Blue Swim School collected in 2024.
The franchise fees allocated to the right to access Big Blue Swim School's intellectual property are recognized as revenue on a straight-line basis over the term of the franchise agreement. If a DRA is in place, the upfront fees are deferred and apportioned to each franchise agreement signed, with the pro-rata amount recognized as revenue over the life of the agreement. Royalties, on the other hand, are earned as a percentage of the franchisee's gross revenues.
Because the excerpt does not provide the total franchise fees collected by Big Blue Swim School in 2024, a prospective franchisee should ask the franchisor directly for this information. Understanding the total franchise fees collected in a given year can provide insight into the growth and financial health of the franchise system.