What is the term of the franchise agreement that dictates the revenue recognition period for Chocolate Fish Coffee?

According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, the remaining franchisee fee not allocated to pre-opening activities is recorded as Unearned Revenue and will be recognized over the term of the franchise agreement.

For a prospective Chocolate Fish Coffee franchisee, this means that the initial franchise fee is not fully recognized as revenue by the franchisor immediately. Instead, a portion of it is allocated to pre-opening activities, with the remainder recognized gradually over the life of the franchise agreement. This accounting practice reflects the ongoing rights and services Chocolate Fish Coffee provides to its franchisees throughout the term of their agreement.

The FDD does not specify the exact length of the franchise agreement term. Therefore, a prospective franchisee should clarify the specific term length with Chocolate Fish Coffee to fully understand the revenue recognition schedule and the period over which the initial franchise fee is recognized as earned revenue by the franchisor.