Does Chocolate Bash provide any brand-specific training as part of the pre-opening activities?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company's primarily performance obligation under the franchise agreement mainly includes granting certain rights to access the Company's intellectual property and a variety of activities relating to opening a franchise unit, including initial training and other such activities commonly referred to collectively as "pre-opening activities", which are recognized as a single performance obligation. The Company expects that certain pre-opening activities provided to the franchisee will not be brand specific and will provide the franchisee with relevant general business information that is separate and distinct from the operation of a company-branded franchise unit. The portion of pre-opening activities that will be provided that is not brand specific is expected to be distinct as it will provide a benefit to the franchisee and is expected not to be highly interrelated or interdependent to the access of the Company's intellectual property, and therefore will be accounted for as a separate distinct performance obligation. All other pre-opening activities are expected to be highly interrelated and interdependent to the access of the Company's intellectual property and therefore will be accounted for as a single performance obligation, which is satisfied by granting certain rights to access the Company's intellectual property over the term of each franchise agreement.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 38)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, the company's primary performance obligation under the franchise agreement includes granting rights to access their intellectual property and various pre-opening activities, including initial training. These pre-opening activities are considered a single performance obligation. However, Chocolate Bash distinguishes between brand-specific and non-brand-specific training.
Chocolate Bash specifies that some pre-opening activities will not be brand-specific. This non-brand-specific training will provide franchisees with general business information that is separate and distinct from the operation of a Chocolate Bash franchise. The FDD indicates that this portion of the pre-opening activities is considered distinct because it benefits the franchisee and is not highly interrelated or interdependent with access to Chocolate Bash's intellectual property. Therefore, it's accounted for as a separate performance obligation.
All other pre-opening activities, including training, are expected to be highly interrelated and interdependent with the access to Chocolate Bash's intellectual property. These activities are accounted for as a single performance obligation, which is satisfied by granting rights to access the company's intellectual property over the franchise agreement term. This implies that Chocolate Bash does provide brand-specific training as part of its pre-opening activities, in addition to the general business training.