What is a multiunit development rider for a Clean Your Dirty Face franchise agreement?
Clean_Your_Dirty_Face Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisees interested in opening multiple locations have the option to sign a franchise agreement with a multiunit development rider, which includes the fee for the first location and the franchise fees required to open up two additional locations under separate franchise agreements. It is specified in the franchise agreement that each subsequent location must be opened within a specified number of months following the opening of the prior location under a separate agreement. Franchise fee revenue related to the second and third locations opened under a multi-unit development rider is classified as deferred revenue until the specified time period has elapsed or a subsequent location has been opened, whichever is sooner.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Clean Your Dirty Face Franchise Disclosure Document, a multiunit development rider is an option for franchisees interested in opening multiple locations. This rider is added to the franchise agreement and includes the fee for the first location, along with the franchise fees required to open two additional locations under separate franchise agreements.
The agreement specifies that each subsequent Clean Your Dirty Face location must be opened within a certain timeframe after the opening of the previous location. These subsequent locations operate under separate franchise agreements, but are governed by the terms of the multiunit development rider.
For Clean Your Dirty Face, franchise fee revenue related to the second and third locations opened under a multi-unit development rider is classified as deferred revenue. This revenue remains deferred until the specified time period for opening the subsequent location has elapsed or until the subsequent location has actually opened, whichever occurs sooner. This accounting practice reflects that Clean Your Dirty Face has not yet fully performed its obligations related to those future locations until they are operational.