When are royalty revenues recognized by Black Bear Diner from franchised restaurants?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
ovides additional information about the Companyowned and franchised restaurants operating as of December 25, 2024 and December 27, 2023:
| Cash flows from investing activities: | | | |---|---|---| | ( 168,891) | ( 296,015) | | | Purchases of property and equipment | | | | Net cash used in investing activities | ( 168,891) | ( 296,015) | The Company-owned restaurants are operated by Bear Tracks Holdings LLC (BTH), an entity under common control with the Company. The Company and BTH are owned by BBD Opco LLC (Parent). BBD Opco LLC is owned by BBD Intermediate Holdco, LLC (Intermediate) and for which Intermediate is ultimately owned by BBD Holdco LLC (Holdco).
The Company also operates a national advertising fund (NAF) which administers national, regional, and local advertising and marketing initiatives for the brand. The Company receives funds from Black Bear Diner branded restaurants approximating 1.00% of revenue. The Company physically segregates these funds to ensure that the funds are utilized specifically for advertising and other brand
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
Based on the 2025 Black Bear Diner Franchise Disclosure Document, the company recognizes revenue from its national advertising fund (NAF) which receives funds approximating 1.00% of revenue from Black Bear Diner branded restaurants. These funds are specifically used for advertising and brand development initiatives as defined in the franchise agreements.
The FDD states that 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.
For a prospective franchisee, this means that while they contribute to the national advertising fund, the actual revenue recognition by Black Bear Diner related to these funds occurs when the advertising is aired, displayed, or when other promotional costs are incurred. This accounting practice ensures that the funds are directly tied to marketing activities that benefit the Black Bear Diner brand.