Over what period does Carbones Pizzeria recognize deferred commission expense?

According to the 2025 Carbones Pizzeria FDD, deferred commissions for franchise sales are recorded when the sale occurs. These commissions are then recognized as an expense over the term of the franchise agreement.

Since the initial franchise agreement for Carbones Pizzeria is 10 years, this means the commission expenses are recognized over that 10-year period. This accounting practice ensures that the commission expense is matched with the revenue generated from the franchise over its lifespan.

For a prospective franchisee, this accounting practice is important to understand because it affects the franchisor's financial statements. It provides a more accurate picture of the franchisor's profitability by spreading out the commission expenses over the period that the franchise is operating and generating revenue.