How does Bigfoot Forestry recognize franchise fees as performance obligations?
Bigfoot_Forestry Franchise · 2025 FDDAnswer from 2025 FDD Document
must hire a Project Manager to manage at least one (1) but not more than three (3) of your Bigfoot Forestry Businesses. The Managing Owner, and each Project Manager, can manage a maximum of three (3) Bigfoot Forestry Businesses. You must hire an additional Project Manager for every three (3) additional Bigfoot Forestry Businesses you open. Each Project Manager you hire must meet all criteria and conditions set forth in the most recent Franchise Agreement executed by you.
- 5. DEVELOPMENT FEE. At the time you sign this Agreement you must pay us a development fee in the amount set forth in Part B of ATTACHMENT "A", which is calculated as the aggregate sum of the initial franchise fees imposed for all Bigfoot Forestry Businesses you are required to develop pursuant to this Agreement. The development fee is fully earned and nonrefundable upon execution of this Agreement.
- 6. DEVELOPER ENTITY. You represent that Part A of ATTACHMENT "A" includes a complete and accurate list of your Owners. Upon request, you must send us a resolution of the Developer Entity authorizing the execution of this Agreement, a copy of its organizational documents and a current Certificate of Good Standing.
Source: Item 23 — RECEIPT (FDD pages 42–162)
What This Means (2025 FDD)
Based on the 2025 Bigfoot Forestry Franchise Disclosure Document, the development fee, which is the aggregate sum of initial franchise fees for all Bigfoot Forestry Businesses a franchisee is required to develop, is fully earned and nonrefundable upon the execution of the agreement. This means Bigfoot Forestry recognizes the revenue from these fees immediately when the agreement is signed, rather than over the course of the franchise term.
For a prospective Bigfoot Forestry franchisee, this means that the development fee is nonrefundable once the agreement is signed. The franchisee is obligated to develop and open Bigfoot Forestry Businesses according to the development schedule. The franchisee must sign a separate Franchise Agreement for each Bigfoot Forestry Business, with the initial franchise fee determined as per Attachment A. Payment of the development fee covers the initial franchise fee for each Franchise Agreement signed under the development agreement.
This immediate recognition of revenue is a common practice when the franchisor has performed its initial obligations, such as granting the franchise rights and providing initial training. However, it's important for the franchisee to understand that this fee is nonrefundable, regardless of whether they successfully open and operate all the planned Bigfoot Forestry Businesses. The franchisee bears the risk of ensuring they can meet the development schedule and operate the businesses successfully.
If a franchisee opens and operates more than three Bigfoot Forestry Businesses, they are required to hire a Project Manager to oversee operations. The Managing Owner or Project Manager can manage a maximum of three Bigfoot Forestry Businesses, necessitating the hiring of additional Project Managers for every three additional businesses. Each Project Manager must meet the criteria outlined in the most recent Franchise Agreement.