How does Bw Premier Collection determine the Best Western Travel Card breakage rate?
Bw_Premier_Collection Franchise · 2025 FDDAnswer from 2025 FDD Document
Best Western Travel Card® (a card having no expiration date and no usage or non-usage fees) revenue is recognized when: (i) the Best Western Travel Card is redeemed, or (ii) the likelihood of the Best Western Travel Card being redeemed is remote (Best Western Travel Card breakage), and the Company determines that there is not a legal obligation to remit the unredeemed Best Western Travel Card balance to the relevant jurisdiction. The determination of the Best Western Travel Card breakage rate is based upon Company specific historical redemption patterns. Best Western Travel Card breakage is included in program revenues in the Consolidated Statements of Revenues and Expenses.
Source: Item 23 — Receipts (FDD pages 54–203)
What This Means (2025 FDD)
According to the 2025 FDD, Bw Premier Collection determines the Best Western Travel Card breakage rate based upon company-specific historical redemption patterns. Breakage refers to the instance when the likelihood of a Best Western Travel Card being redeemed is remote, and the company determines that there is no legal obligation to remit the unredeemed balance to the relevant jurisdiction. This breakage is then included as part of the program revenues within the Consolidated Statements of Revenues and Expenses.
In simpler terms, Bw Premier Collection analyzes how Travel Cards have been used in the past to predict how many cards will likely never be redeemed. If they determine that a card is unlikely to be used and they aren't legally required to return the money, they recognize that unredeemed balance as revenue.
This revenue recognition method could impact a franchisee because the financial performance of the Best Western Travel Card program, including breakage, can affect the overall financial health of Bw Premier Collection, which in turn could influence the resources and support available to franchisees. Franchisees should inquire about the historical trends in Travel Card redemption and breakage to understand how this revenue stream is managed and its potential impact on the franchise system.