What services does Carbones Pizzeria agree to provide to the franchisee when an individual franchise is sold?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
When an individual franchise is sold, the Company agrees to provide certain services to the franchisee. Generally, these services include assistance in site selection, training personnel, implementation of an accounting system, and design of a quality control program. The Company's initial and renewal franchise fees are considered highly dependent upon and interrelated with the franchise right granted in the franchise agreement. As such, these franchise fees are recognized over the contractual term of the franchise agreement. The contract term for the initial franchise agreements is 10 years commencing on the earlier of the date when the restaurant opens or twelve months following the date the franchise agreement was signed. During that time the franchisee is allowed to use the Carbone's Pizzeria name and menu. When the franchise agreement expires, the franchise may pay an additional franchise fee to renew the agreement. The contract term for franchise renewal agreements is 10 years. There were no initial and renewal franchise fees in the year ended October 31, 2022.
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to the 2025 FDD, when a Carbones Pizzeria franchise is sold, the company agrees to provide specific services to the franchisee. These services generally include assistance with site selection to find a suitable location for the restaurant. Carbones Pizzeria also commits to training the franchisee's personnel, ensuring they are equipped with the necessary skills to operate the business effectively.
In addition to site selection and personnel training, Carbones Pizzeria will assist in the implementation of an accounting system. This is crucial for managing the financial aspects of the franchise. Furthermore, the company will aid in designing a quality control program to maintain the standards and consistency of the Carbone's Pizzeria brand.
These initial services are tied to the franchise fees and are recognized over the 10-year contractual term, which begins when the restaurant opens or twelve months after signing the franchise agreement. During this period, the franchisee has the right to use the Carbone's Pizzeria name and menu. Upon expiration, the franchisee can renew the agreement by paying an additional franchise fee.