When does Boulder Designs recognize revenue from the sale of goods to customers?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company sells and delivers equipment purchased from third-party equipment manufacturers to U.S. based franchisee-owned stores. Revenue is recognized upon transfer of control of ordered items, generally upon delivery to the customer, which is
Notes to Financial Statements (Continued)
(1) Summary of Significant Accounting Policies (continued)
(i) Revenue Recognition (continued)
when the customer obtains physical possession of the goods, legal title is transferred, the customer has all risks and rewards of ownership and an obligation to pay for the goods is created. Franchisees are charged for all freight costs incurred for the delivery of equipment. Freight revenue is recorded within equipment revenue and freight costs are recorded within cost of equipment and supplies.
All revenue amounts are recorded net of applicable sales tax.
Source: Item 23 — RECEIPT (FDD pages 50–217)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, revenue from the sale of equipment to franchisees is recognized when control of the ordered items is transferred. This typically occurs upon delivery to the customer. At this point, the customer has physical possession, legal title, all risks and rewards of ownership, and an obligation to pay for the goods.
Boulder Designs also charges franchisees for freight costs associated with equipment delivery. This freight revenue is recorded as part of equipment revenue, while the corresponding freight costs are included in the cost of equipment and supplies. All revenue amounts are recorded net of applicable sales tax.
For a prospective Boulder Designs franchisee, this means that the cost of equipment and supplies will include freight. It also means that Boulder Designs recognizes revenue as soon as the franchisee receives the equipment, which is a standard accounting practice.