How does Carbones Pizzeria recognize revenue from royalties received from franchisees?

According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the company recognizes royalty revenue based on a percentage of sales reported by franchisees each week. Carbones Pizzeria receives a service fee, calculated as a percentage of sales, from its franchised locations. This revenue recognition occurs weekly, aligning with the franchisee's reported sales figures. This means that as a franchisee makes sales, a portion of those sales is immediately recognized as royalty revenue by Carbones Pizzeria.

For a prospective Carbones Pizzeria franchisee, this means that the royalties they pay contribute directly to the franchisor's weekly revenue. The royalty payments are tied directly to sales performance, which is a common practice in franchising. This system ensures that the franchisor's income is aligned with the success of its franchisees.

This revenue recognition method is fairly standard in the franchise industry, where franchisors typically collect royalties as a percentage of gross sales. The weekly recognition aligns revenue with the ongoing support and brand usage provided to franchisees. Franchisees should ensure they understand the exact percentage used to calculate royalties, as this will directly impact their profitability.