What is the purpose of the affiliation fee for a Bw Premier Collection franchise?
Bw_Premier_Collection Franchise · 2025 FDDAnswer from 2025 FDD Document
Revenue Recognition
Fees, dues and assessments
Fees, dues and assessments are established by the membership and the Board of Directors to compensate the Company for providing services to Members, soft brand licensees, SureStay franchisees, and WorldHotels licensees. The Company has performance obligations to provide hotel support and marketing, and a license to our hotel system intellectual property for the use of our brand names. Our performance obligations are a series of distinct goods or services, for which the Company receives the following types of variable consideration through our membership agreements with our Members. Monthly fees and assessments (which include advertising, sales and marketing and reimbursement for the Company's technology expenses) represent fixed and variable consideration and are billed monthly and recognized as revenue in the same month as the services are provided and charges become fixed or determinable and payable. Annual dues are established, billed and payable each year for continuing membership during the succeeding year. Annual dues are recognized as revenue ratably in the year to which the continuing membership applies. Any Member may resign from the Company at any time, but if the Member resigns or is terminated, fees and dues become immediately due and payable per the terms of the applicable contract and are recognized as revenue when cash is received regardless of the term of the contract.
Affiliation fee revenues from Best Western branded hotels are fixed consideration payable upon approval of the Member or licensee by the Board of Directors and acceptance of membership or license terms by the property owner. These revenues are recognized on a straight-line basis over the hotelier's expected life as a Best Western branded hotel or over the initial contract term. SureStay franchisee initial fees are due upon execution of a franchise agreement and recognized over the initial term of the franchise agreement. WorldHotels hotel integration fees are recognized on a straight-line basis over the expected life as a WorldHotels branded hotel. Affiliation fee revenues were $9.8 million and $8.9 million for the y
Source: Item 5 — Initial Fees (FDD pages 18–19)
What This Means (2025 FDD)
According to the 2025 Bw Premier Collection FDD, affiliation fees are collected to compensate the company for providing services to members, soft brand licensees, SureStay franchisees, and WorldHotels licensees. These services include hotel support and marketing, as well as licensing the use of their hotel system intellectual property and brand names.
The FDD specifies that Bw Premier Collection recognizes affiliation fee revenues from Best Western branded hotels as fixed consideration. This fee is payable upon the Board of Directors' approval of the member or licensee and the property owner's acceptance of the membership or license terms. The revenue from these fees is then recognized on a straight-line basis over the hotelier's expected life as a Best Western branded hotel or over the initial contract term.
For the years ending November 30, 2023, and 2022, Bw Premier Collection's affiliation fee revenues amounted to $9.8 million and $8.9 million, respectively. This indicates the significance of affiliation fees as a revenue stream for the company and highlights the ongoing investment in supporting and marketing its branded hotels.