How does Deka Lash recognize revenue related to product sales to franchisees?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
Revenue related to product sales is recognized upon shipment of the product to the franchise. Franchises may be required to purchase certain product from the Company. These products may be supplied from an affiliated company or an outside vendor. The affiliate company or vendor may pay the Company a rebate based on the purchases being made by the franchises. These rebates are recognized as a reduction of product cost. For the years ended December 31, 2023, 2022, and 2021, there were no rebates received from affiliate companies or vendors.
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, revenue from product sales to franchisees is recognized upon shipment of the product. This means that Deka Lash records the revenue when the products are sent to the franchisee, not when the franchisee sells the product to a customer.
Franchisees may be required to purchase certain products from Deka Lash, which could be supplied by an affiliated company or an outside vendor. In some cases, the affiliated company or vendor may provide a rebate to Deka Lash based on the purchases made by franchisees. These rebates are then recognized by Deka Lash as a reduction of product cost.
For the years 2021, 2022 and 2023, Deka Lash did not receive any rebates from affiliate companies or vendors. This accounting practice affects how Deka Lash reports its financial performance and could influence the cost of goods sold for the company.