What services does Carbones Pizzeria provide to the franchisee in exchange for the renewal franchise fee?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
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, 2024.
Company Restaurant Sales
The Company earns revenue from sales at the Company owned restaurant and is recognized at the time of sale.
Advertising
In accordance with signed franchise agreements, franchisees contribute royalties to an advertising fund. The fund is to be used to maximize public recognition of Carbone's Pizzeria. The Company expenses advertising costs as incurred. Advertising expenses are included in sales and marketing expenses for the years ended October 31, 2024 amounted to $237,855.
Income Taxes
The Company accounts for income taxes under asset and liability method.
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to the 2025 FDD, when a Carbone's Pizzeria franchise agreement expires, the franchisee has the option to pay a renewal franchise fee. In exchange for this fee, the franchisee is granted a contract term for franchise renewal agreements that lasts 10 years. During this 10-year renewal period, the franchisee retains the right to use the Carbone's Pizzeria name and menu.
In general, when Carbone's Pizzeria sells an individual franchise, they agree to provide certain services to the franchisee. These services typically include assistance with site selection, personnel training, implementation of an accounting system, and the design of a quality control program. However, the FDD only mentions these services in the context of the initial franchise fee, not the renewal fee.
It's important to note that the FDD states that there were no initial and renewal franchise fees for the year ended October 31, 2022, the year ended October 31, 2023, and the year ended October 31, 2024. This could mean that the company did not sell any new franchises or renew any existing ones during those periods. A prospective franchisee should confirm with Carbone's Pizzeria what specific services are provided in exchange for the renewal fee.