When does C12 Group recognize initial fees as revenue?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
When an individual franchise is sold, the Company agrees to provide certain services to the franchisee, including site selection, training, reference and promotional materials, and assistance with local C12 events. The Company recognizes initial fees as revenue when substantially all initial services required by the franchise agreement are performed, which is generally upon signing of the franchise agreement.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to C12 Group's 2025 Franchise Disclosure Document, the company recognizes initial franchise fees as revenue when substantially all initial services required by the franchise agreement are performed. This typically occurs upon the signing of the franchise agreement.
This means that C12 Group recognizes the $20,000 initial, non-refundable territory fee as revenue once they have completed their obligations to the franchisee. These services include assisting with site selection, providing training, supplying reference and promotional materials, and offering assistance with local C12 events.
For a prospective franchisee, this accounting practice indicates that C12 Group recognizes revenue early in the franchise relationship, specifically when the franchise agreement is signed and initial services are rendered. This is a common practice in franchising, as it aligns revenue recognition with the delivery of initial setup and training services.