How does Checkers recognize revenue from delivery sales, and what deductions are made?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
The delivery sales performance obligation is satisfied upon the delivery of food to a third-party delivery partner. The Company acts as an agent in delivery sales and, therefore, records the revenue net of costs which include commissions, fees, and in certain cases taxes. In a delivery sale the Company has arranged for another party to transfer the food to an end-customer. The delivery partner maintains the costs of web and mobile applications and directly transacts with the end-customer. The delivery partner then schedules for the restaurant to prepare and deliver the food to one of the delivery partner's employees. The net revenue is generally paid in terms of 2 to 7 days from the end of the week of sale. Delivery sales revenue varies by the costs of the service and by delivery partner.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, revenue from delivery sales is recognized when the food is delivered to a third-party delivery partner. Checkers acts as an agent in these transactions. This means that Checkers arranges for another party to transfer the food to the end customer, with the delivery partner handling the web and mobile applications and directly interacting with the customer. The delivery partner also schedules the restaurant to prepare and deliver the food to their employees.
Checkers records the revenue from these delivery sales net of costs. These costs include commissions, fees, and in certain cases, taxes. The net revenue is generally paid to Checkers within 2 to 7 days from the end of the week of the sale. The amount of revenue Checkers recognizes from delivery sales can vary depending on the costs of the service and the specific delivery partner involved.
For a prospective franchisee, this means that the revenue reported from delivery sales will not be the gross amount charged to the customer. Instead, it will be the amount remaining after deducting the fees and commissions charged by the third-party delivery service. This net revenue approach reflects Checkers' role as an agent in the delivery transaction, where they facilitate the sale but do not bear the full costs associated with it. Understanding this revenue recognition method is crucial for franchisees to accurately assess their potential earnings from delivery sales and manage their financial planning.