How does Bumble Roofing recognize revenue for cost-plus fee commercial roofing contracts?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
Bumble-LA's commercial roofing services are provided through discrete project agreements. The contracts are awarded on a competitively bid and negotiated basis. The Company's contracts generally include a single performance obligation for which revenue is recognized over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. For cost-plus fee contracts, the Company recognizes revenue when services are performed and contractually billable based upon the hours incurred and agreed-upon hourly rates as well as subcontractor costs and materials cost. Revenue on fixed-price contracts is recognized and invoiced over time using the cost-to-cost percentage-of-completion method.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 53)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, revenue recognition for commercial roofing contracts depends on the contract type. For cost-plus fee contracts, Bumble Roofing recognizes revenue when services are performed and contractually billable. This recognition is based on the hours incurred, agreed-upon hourly rates, subcontractor costs, and materials costs. This means that as Bumble Roofing incurs costs and performs services, they can recognize revenue proportionally.
This approach to revenue recognition provides a steady stream of income as the project progresses, aligning revenue with the actual work completed. It also allows for accurate tracking of project costs and profitability. For a franchisee, this means that cash flow can be managed more effectively, as revenue is generated throughout the project rather than only upon completion.
In contrast, Bumble Roofing recognizes revenue on fixed-price contracts using the cost-to-cost percentage-of-completion method. This method recognizes revenue and invoices over time based on the proportion of costs incurred to the total estimated costs. Understanding these different revenue recognition methods is crucial for franchisees to manage their finances and project accounting accurately.