When are royalties recognized as revenue by Chop5 Salad Kitchen?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
When a franchisee purchases a CHOP5 franchise, the Company grants the franchisee the right to use the proprietary methods, techniques, trade dress, trademarks, and logos ("the license"). This is considered to be symbolic intellectual property. Revenues related to the license are continuing royalties that are 5.0% of gross revenues. These revenues will be used to continue the development of the Company's brand, the franchise system and provide on-going support for the Company's franchisees. The royalties are billed weekly and are recognized as revenue when earned. The Company has no revenue from license fees during the years ended December 31, 2023, 2022, and 2021.
Source: Item 23 — RECEIPT (FDD pages 50–178)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, royalties, which are 5.0% of gross revenues, are billed weekly and recognized as revenue when earned. These royalties are intended to support the ongoing development of the Chop5 Salad Kitchen brand, the franchise system, and to provide continuous support to franchisees.
In simpler terms, Chop5 Salad Kitchen collects a percentage of each franchisee's sales as a royalty. This royalty is calculated as 5% of the gross revenues. Chop5 Salad Kitchen accounts for this income as revenue at the point when it has been earned, and they bill franchisees weekly.
It is important to note that the company had no revenue from license fees for the years ending December 31, 2023, 2022 and 2021. This could be due to the company not having any franchisees at that time, or that the company was not collecting royalties at that time.