What accounting standards does Black Bear Diner use to recognize revenue?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
development initiatives as defined in the respective franchise agreements. From time to time, the Company utilizes the funds received from franchisees for advertising purposes as reimbursement of its costs, including salaries and other internal costs of administering the NAF. The reimbursements totaled $172,139 and $118,881 for the years ended December 25, 2024 and December 27, 2023, respectively, and are netted within payroll and benefits expenses on the statements of income. The production costs of advertising are expensed when the advertisements are first aired or displayed. All other advertising and promotional costs are expensed in the period incurred.
Use of Estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Areas that include significant estimates made by management include, but are not limited to, estimated useful lives and carrying value of long-lived assets and the valuation of intangible assets and goodwill. Actual results could differ significantly from those estimates.
Fiscal Year: The Company utilizes a 52/53-week fiscal year ending on the last Wednesday prior to December 31. The Company's financial statements reflect accounts and balances as of and for the fiscal years ended December 25, 2024 and December 27, 2023, which both contained 52 weeks.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to the 2025 FDD, the preparation of Black Bear Diner's financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses during the reporting period. These estimates include the useful lives and carrying value of long-lived assets and the valuation of intangible assets and goodwill. Actual results could differ significantly from these estimates.
Black Bear Diner also operates a national advertising fund (NAF), receiving funds from Black Bear Diner branded restaurants approximating 1.00% of revenue. These funds are segregated and used for advertising and brand development initiatives. The company sometimes uses these funds to reimburse its costs, including salaries and other internal costs of administering the NAF.
For prospective franchisees, this means that the financial performance reported by Black Bear Diner involves certain management estimates that could impact the actual financial results. Additionally, franchisees contribute to the national advertising fund, which is used for marketing and promotional activities, with an accounting of the fund available to franchisees upon request.