Were Burneys Sweets More Franchise Agreements modified in 2019, and if so, how?
Burneys_Sweets_More Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's accounting policy through December 31, 2018, was to recognize initial franchise fees when received, upon a new restaurant opening and at the start of a new franchise term. Beginning in January 2019, initial franchise fees have been to recognize a portion in the current as the Company satisfies the initial performance obligation and then an amount of revenue to be recognized over the franchise term, which is generally 10 years. The Company has not restated any prior financial information as a result of the adoption of Topic 606, reason is the initial franchise fee amount in previous years was only enough to cover current expenses. 2019 Franchises Agreements were modified with an increased amount.
Source: Item 23 — RECEIPT (FDD pages 50–199)
What This Means (2025 FDD)
According to Burneys Sweets More's 2025 Franchise Disclosure Document, the franchise agreements were modified in 2019. Specifically, the modifications relate to how the company recognizes initial franchise fees. Prior to January 1, 2019, Burneys Sweets More recognized initial franchise fees when they were received, upon a new restaurant opening, and at the start of a new franchise term.
However, beginning in January 2019, the company changed its accounting policy to recognize a portion of the initial franchise fees in the current period as the company satisfies its initial performance obligation. The remaining amount of revenue is recognized over the franchise term, which is generally 10 years. This change was implemented in response to the Financial Accounting Services Board issuing Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which went into effect on January 1, 2019.
Additionally, the 2025 FDD states that Burneys Sweets More did not restate any prior financial information as a result of adopting Topic 606 because the initial franchise fee amount in previous years was only enough to cover current expenses. The franchise agreements were modified in 2019 with an increased amount. This change in revenue recognition could impact how Burneys Sweets More reports its financial performance and may be relevant for prospective franchisees to understand when evaluating the franchise opportunity.