When are deferred commissions for sales of Carbones Pizzeria franchises recorded?

According to the 2025 Carbones Pizzeria Franchise Disclosure Document, deferred commissions for the sales of franchises are recorded at the time of the sale. These commissions are then recognized as commission expenses over the term of the franchise agreement.

For a prospective Carbones Pizzeria franchisee, this accounting practice means that the franchisor recognizes the commission expenses related to franchise sales over the life of the franchise agreement rather than all at once. This approach aligns the expense recognition with the period during which the franchisee is operating and generating revenue.

This accounting method provides a more accurate representation of the financial performance of Carbones Pizzeria by matching the commission expenses with the ongoing benefits derived from the franchise agreement. It also reflects the industry-standard practice of spreading out revenue and expenses over the duration of the franchise term.