When does Card My Yard recognize royalty fee revenue from franchisees?
Card_My_Yard Franchise · 2025 FDDAnswer from 2025 FDD Document
- Royalties Per the individual franchise agreements, once a franchise is in operation, the franchisees are to pay the Company a royalty fee of 25% of gross sales. These fees are transferred from the credit card processor at the time of customer payment. Beginning in 2022, franchise agreements have a required minimum royalty amount and the Company is able to collect the difference between the monthly royalty minimum amount and royalties earned from gross sales. The Company recognizes royalty fee revenue as earned, which is when the franchisee fulfills its performance obligation to its customer.
Source: Item 23 — RECEIPTS (FDD pages 84–259)
What This Means (2025 FDD)
According to Card My Yard's 2025 Franchise Disclosure Document, royalty fee revenue is recognized when the franchisee fulfills its performance obligation to its customer. The royalty fee is 25% of gross sales. These fees are transferred from the credit card processor at the time of customer payment.
Franchise agreements beginning in 2022 have a required minimum royalty amount. Card My Yard collects the difference between the monthly royalty minimum amount and royalties earned from gross sales.
For a Card My Yard franchisee, this means that revenue recognition is tied directly to service delivery. The franchisee pays 25% of gross sales as a royalty fee, with payments processed through the credit card processor when the customer pays. Franchisees need to be aware of the minimum royalty requirements introduced in 2022, as they may need to cover any shortfall if their gross sales do not meet the minimum threshold.