What is Carbones Pizzeria's process for determining the contract price 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 Carbones Pizzeria's 2025 Franchise Disclosure Document, the company recognizes revenue when control of products or services are transferred to customers. This recognition occurs in an amount that reflects the consideration the company expects to receive for those products and services. The process involves several steps to determine the contract price.
First, Carbones Pizzeria identifies the contract with the customer. Next, they identify the performance obligations within that contract. Then, they determine the contract price. Following this, the transaction price is allocated to the performance obligations outlined in the contract. Finally, revenue is recognized when the company satisfies its performance obligation.
For a Carbones Pizzeria franchisee, this means that revenue from sales at the company-owned restaurant is recognized at the time of the sale. This multi-step process ensures that revenue is accurately recorded and reflects the value of the goods or services provided to the customer. Understanding this process is crucial for franchisees to manage their finances and ensure compliance with accounting standards.