What constitutes deferred revenue for Bojangles, as it relates to franchise agreements?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
by the priorities of payment is generally remitted to BRI in the form of an equity distribution.
The 2024-1 Senior Notes are subject to a series of covenants and restrictions customary for transactions of this type, including (i) required actions to better secure collateral upon the occurrence of certain performance-related events, (ii) application of certain disposition proceeds as note prepayments after a set time is allowed for reinvestment, (iii) maintenance of specified reserve accounts, (iv) maintenance of certain debt service coverage ratios, (v) indemnification payments for defective or ineffective collateral, and (vi) covenants relating to record keeping, access to information and similar matters. If certain covenants or restrictions are not met, the 2024-1 Senior Notes are subject to accelerated repayment e
Source: Item 22 — CONTRACTS (FDD page 82)
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, deferred revenue includes initial franchise license and development fees that Bojangles has received but for which they have not yet fulfilled their obligations under the franchise agreements. This means that Bojangles recognizes the revenue over time as they satisfy their contractual obligations to the franchisee.
For a prospective Bojangles franchisee, this indicates that the initial franchise and development fees paid to Bojangles are not immediately recognized as revenue by Bojangles. Instead, these fees are recorded as deferred revenue on Bojangles's balance sheet and are recognized as revenue as Bojangles provides services and fulfills its obligations to the franchisee, such as providing training, site selection assistance, and other support services.
Additionally, Bojangles has an agreement with a vendor where they and their franchisees purchase certain beverage products over an extended period. In exchange for this commitment, Bojangles received cash payments of $110,000 and $953,000 during the years ended December 26, 2021, and December 27, 2020, respectively. Bojangles recognized $115,000 of this amount as a reduction of general and administrative costs in the accompanying consolidated statements of operations for each of the years ended December 29, 2024, December 31, 2023, and December 25, 2022, based on the terms of the agreement. This deferred revenue is also recognized over time as Bojangles fulfills its obligations under the agreement.