How does Carbones Pizzeria recognize revenue from royalties received from franchised locations?

According to the 2025 Carbones Pizzeria Franchise Disclosure Document, the company recognizes revenue from royalties each week. Carbones Pizzeria receives a service fee based on a percentage of sales each week from its franchised locations. This royalty revenue is recognized based on the reported franchisee sales.

In simpler terms, Carbones Pizzeria collects royalties, which are a percentage of sales, from its franchisees on a weekly basis. The revenue that Carbones Pizzeria recognizes from these royalties is directly tied to the sales figures reported by the franchisees each week. This means that as franchisee sales increase, the royalty revenue recognized by Carbones Pizzeria also increases, and vice versa.

This approach is common in the franchise industry, as it aligns the franchisor's revenue with the success of its franchisees. It also provides a consistent and predictable revenue stream for Carbones Pizzeria, as long as franchisees are reporting their sales accurately and consistently. Prospective franchisees should understand that their weekly sales directly impact the royalties paid to Carbones Pizzeria, and therefore, the franchisor's revenue recognition.