How does Canine Dimensions recognize revenue upon completion of training?
Canine_Dimensions Franchise · 2025 FDDAnswer from 2025 FDD Document
worldwide pandemic, implementation was delayed a year.
Note 5 Franchise Revenue Recognition (Continued)
After assessing the recent guidance, the Company concludes the use of brand name and logo and ongoing access to the operating procedures manual as the core components of the franchise license. The Company further concludes the initial training services and territory fee are distinct performance obligations that are one-time in nature and completed upon such date that franchisee's training is completed.
Therefore, the Company concludes that the franchise agreement includes distinct performance obligations for the use of its brand name and logo, supported by marketing and other support services, for the life of each ten-year franchise agreement, while the obligations of the Company terminate for training services and territory fee upon the conclusion of the initial training.
As such the Company recognizes as revenue upon the completion of training $12,500. The balance of initial fees results in $35,000 ratably recognized over the ten-year or fiveyear term of the franchise agreement.
The Company also enters into renewals of existing franchise agreements without the requirement for the initial expenses incurred on entering int a new franchise agreement. In this situations, the Company requires a renewal fee of $3,500 and an ongoing monthly royalty fee.
The Company recognizes revenues related to renewal fees ratably over each of the five years of the renewal term based on its obligations to provide limited use of the Company's brand name and logo, supported by marketing activities, and ongoing access to continually upda
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2025 FDD)
According to Canine Dimensions's 2025 Franchise Disclosure Document, the company recognizes $12,500 as revenue upon the completion of a franchisee's initial training. Canine Dimensions considers the initial training services to be a distinct performance obligation that is completed once the training concludes.
In addition to the revenue recognized upon completion of training, Canine Dimensions recognizes the balance of initial fees, amounting to $35,000, ratably over the term of the franchise agreement, which is either ten or five years. This revenue recognition method reflects the ongoing obligations of Canine Dimensions to provide the use of its brand name and logo, along with marketing and support services, throughout the duration of the franchise agreement.
For franchise agreement renewals, Canine Dimensions requires a renewal fee of $3,500 along with an ongoing monthly royalty fee. The revenue from these renewal fees is recognized ratably over each of the five years of the renewal term. This is based on Canine Dimensions's continuing obligation to provide limited use of its brand name and logo, marketing support, and access to updated operating procedures during the renewal period.