What pre-opening services does Capriottis Sandwich Shop provide to franchisees?

The Company's franchise agreements include (a) the right to use the Company's symbolic intellectual property over the term of each franchise agreement (Franchise Right), (b) pre-opening services, such as training and (c) ongoing services, such as management of the advertising fund contributions, development of training materials and menu items and restaurant monitoring.

The accounting standards created a practical expedient that simplifies the identification of performance obligations for private company franchisors for certain pre-opening services. If the practical expedient is elected, the pre-opening services provided by a franchisor to a franchisee can be accounted for as a single performance obligation, distinct from the franchise license. Pre-opening services per accounting standards are defined as follows:

• 1. Assistance in the selection of a site.
• 1. Assistance in obtaining facilities and preparing the facilities for their intended use, including related financing, architectural, and engineering services, and lease negotiation.
• 1. Training of the franchisee's personnel or the franchisee.
• 1. Preparation and distribution of manuals and similar material concerning operations, administration, and record keeping.
• 1. Bookkeeping, information technology, and advisory services, including setting up the franchisee's records and advising the franchisee about income, real estate, and other taxes or about regulations affecting the franchisee's business.
• 1. Inspection, testing, and other quality control programs.

The Company elected to apply the practical expedient allowed by the accounting standards and has elected to account for all qualifying pre-opening activities as a single performance obligation.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 73)