When does Chem Dry recognize revenue from transfer fees?

According to Chem Dry's 2024 Franchise Disclosure Document, transfer fees are recognized at the time the transfer occurs. This means that Chem Dry accounts for the transfer fee as revenue when the ownership of a franchise is officially transferred from one franchisee to another.

For a prospective franchisee, this indicates that Chem Dry does not recognize the transfer fee as revenue until the transfer is complete. This accounting practice aligns with the general revenue recognition principle of recognizing revenue when the performance obligation is satisfied, which in this case is the completion of the franchise transfer.

This policy provides clarity on when Chem Dry recognizes revenue related to franchise transfers, which can be important for understanding the company's financial reporting and performance. Franchisees involved in transferring their franchise should be aware that Chem Dry will recognize the transfer fee as revenue at the time the transfer is finalized.