On what basis does Browns Chicken determine the standalone selling price for performance obligations?

According to Browns Chicken's 2025 Franchise Disclosure Document, the organization determines the standalone selling price based on the price at which the performance obligation is sold separately. If a contract contains multiple performance obligations, Browns Chicken allocates the transaction price to each performance obligation based on a relative standalone selling price basis. However, this is unless a portion of the variable consideration related to the contract is allocated entirely to a performance obligation.

For a Browns Chicken franchisee, this means that the revenue they recognize will be based on the price of each service or product if sold individually. If a customer purchases a bundled deal, the revenue from that deal will be allocated to each item in the bundle based on its individual selling price. This allocation is important for accurate financial reporting and revenue recognition.

It's important to note that determining the transaction price, especially when it's variable, may require significant judgment from Browns Chicken. Customer sales incentives are accounted for as a reduction to revenue and are estimated primarily using the expected value method. This approach ensures that revenue is recognized at an amount equal to the consideration Browns Chicken expects to be entitled to, providing a clear and consistent method for financial accounting.