What are the primary sources of revenue for Bombs Away, according to this FDD?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
Revenues are primarily derived from franchise fees (one-time and recurring monthly fees). In accordance with Accounting Standards Codification (ASC) Topic 606, Revenue will be recognized when persuasive evidence of an arrangement exists, delivery has occurred, or services have been rendered, the seller's price to the buyer is fixed or determinable, and collectability is reasonable assured. The determination of whether fees and fixed or determinable and collection is reasonable assured involves the use of assumptions. Arrangement terms and customer information are evaluated to ensure that these criteria are met prior to recognition of revenue.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to the 2024 Bombs Away FDD, the company's revenues are primarily derived from franchise fees. These fees consist of both one-time initial franchise fees and recurring monthly fees paid by franchisees.
Bombs Away recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. The determination of whether these criteria are met involves the use of assumptions and the evaluation of arrangement terms and customer information.
In addition to franchise fees, Bombs Away's franchisee receivables also come from royalty fees, brand development contributions, and training fees charged to franchisees. The timing of revenue recognition may differ from the timing of invoicing, leading to the recording of accounts receivable or unearned revenue depending on whether revenue is recognized before or after invoicing.