When are initial and successor franchise fees payable to Boulder Designs?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
Royalties are calculated as a percentage of franchise monthly dues and annual fees over the term of the franchise agreement. Initial and successor franchise fees are payable by the franchisee upon signing a new franchise agreement or successor franchise agreement, and transfer fees are paid to the Company when one franchisee transfers a franchise agreement to a different franchisee.
The Company allocates a portion of the initial franchise fee to pre-opening services, which is recognized as revenue once those services are provided. The remaining initial fee and successor franchise fees, as well as transfer fees, are recognized as revenue on a straight-line basis over the term of the respective franchise agreement.
Source: Item 23 — RECEIPT (FDD pages 50–217)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, initial and successor franchise fees are payable by the franchisee upon signing a new franchise agreement or a successor franchise agreement. These fees, along with transfer fees, contribute to the contract liabilities of Boulder Designs.
Boulder Designs recognizes revenue from these fees differently based on the nature of the services provided. A portion of the initial franchise fee is allocated to pre-opening services, and this portion is recognized as revenue once those services are completed. The remaining portion of the initial fee, along with the successor franchise fees and transfer fees, are recognized as revenue on a straight-line basis over the term of the respective franchise agreement.
For a prospective Boulder Designs franchisee, this means that the initial and successor franchise fees are due at the time of signing the agreement. However, Boulder Designs does not recognize all of this revenue immediately. Instead, a significant portion is recognized over the life of the franchise agreement, reflecting the ongoing rights and services provided by Boulder Designs.