For Coffee News, what do revenues from performance obligations satisfied over time consist of?

According to Coffee News's 2025 Franchise Disclosure Document, revenues from performance obligations satisfied over time consist of initial franchise sale contracts, which typically have four-year terms. This means that Coffee News recognizes the revenue from the initial franchise fee over the duration of the franchise agreement rather than recognizing it all upfront.

For a prospective Coffee News franchisee, this is important because it reflects how the franchisor accounts for its revenue. The document specifies that control transfers to the franchisee over the term of the franchise agreement, generally four years, and franchise sales revenue is recognized on a straight-line basis over the contract term. This accounting method is common in franchising, as it aligns revenue recognition with the ongoing support and services provided to the franchisee throughout the agreement.

Furthermore, the FDD states that Coffee News's franchise sales agreements do not contain variable consideration, and contract modifications are generally minimal. This suggests a straightforward and predictable revenue recognition process for the franchisor, which can provide stability in their financial reporting. Franchisees should be aware of this revenue recognition method, as it can impact the franchisor's financial performance and, potentially, the level of support and resources available to franchisees.