According to Carbones Pizzeria, what must be identified in contracts with customers?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
Revenue is recognized when control of the promised products or services are transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to for those products and services. In general, the Company determines revenue recognition through the following steps:
- · Identification of the contract, or contracts, with customers;
- · Identification of the performance obligation(s) in the contract;
- · determination of the contract price;
- · Allocation of the transaction price to the performance obligations in the contract;
- · Recognition of revenue when, or as, the Company satisfies a performance obligation.
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to the 2025 Carbones Pizzeria FDD, the company recognizes revenue based on several steps, beginning with the identification of contracts with customers. Specifically, Carbones Pizzeria identifies the contract or contracts with customers, and the performance obligations within those contracts. This is a standard accounting practice to determine how and when revenue is recognized.
For a Carbones Pizzeria franchisee, this means that the agreements they enter into with customers must be clearly defined. This includes specifying what products or services are being provided and what the obligations of both the franchisee and the customer are. This ensures that Carbones Pizzeria can accurately account for revenue and comply with accounting standards.
This level of detail in revenue recognition is typical for franchise systems, as it ensures transparency and consistency in financial reporting across all franchise locations. Franchisees should ensure they understand these requirements and maintain accurate records of their customer contracts to facilitate proper revenue recognition by Carbones Pizzeria.