How does Coffee News recognize revenue from royalty payments?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
Revenue from the collection of royalty payments, training fees, and product promotional sales are recognized monthly since they are earned at a point in time. Revenues from the sale of franchises are recognized over the term of the initial franchise agreement, generally four years. The Company provides franchisees with the weekly content and other support in accordance with the franchise agreement.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to Coffee News's 2025 Franchise Disclosure Document, revenue from royalty payments is recognized monthly. Specifically, Coffee News recognizes revenue from the collection of royalty payments when they are earned at a point in time. This also applies to training fees and product promotional sales.
For a prospective franchisee, this means that Coffee News accounts for the royalties you pay on a monthly basis as they receive them. This is a standard accounting practice, as it aligns revenue recognition with the period in which the services are provided and the royalties are earned.
In addition to royalty payments, Coffee News recognizes revenues from the sale of franchises over the term of the initial franchise agreement, which is generally four years. This indicates that the initial franchise fee is not recognized immediately but is spread out over the duration of the agreement, reflecting the ongoing support and services provided to the franchisee.