When does Dermani Medspa recognize revenue from its training classes?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company recognizes revenue from franchise fees during the year in which the related performance obligations are provided to franchisees. The Company has identified three performance obligations delivered as part of the franchise fee related to initial training of franchisees, store location assistance, and rights to intellectual property.
The performance obligation of training franchisees is satisfied at the time of training, and the related revenue is recognized at the time initial training is completed. The transaction price allocated to pre‐ opening training was determined using the cost plus margin approach.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, the company recognizes revenue from franchise fees during the year in which the related performance obligations are provided to franchisees. Dermani Medspa identifies three performance obligations as part of the franchise fee: initial training of franchisees, store location assistance, and rights to intellectual property.
Specifically, Dermani Medspa recognizes revenue from training classes at the time the initial training is completed. The transaction price allocated to pre-opening training was determined using the cost plus margin approach. This means that once the training is done, Dermani Medspa considers that portion of the franchise fee to be earned and recognizes it as revenue.
For a prospective franchisee, this means that the portion of the initial franchise fee allocated to training is recognized by Dermani Medspa as revenue once the franchisee and their manager complete the initial training program. The FDD also states that successful completion of training programs is critical to properly develop, own, and operate a Dermani Medspa franchise.