How does Epcon Communities recognize revenue from the licensing of intellectual property through franchise fees?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
Revenue is recognized when a performance obligation has been satisfied by transferring control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.
Contracts can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. The Company has concluded that licensing of intellectual property (comprised by franchise fees and royalties) and advertising services are separate performance obligations. Advertising services are performed primarily through Marketing. For such arrangements, the contract transaction price is allocated to the separate performance obligations on a relative standalone selling price (SSP) basis. The Company determines the SSP based on an observable standalone selling price when it is available, as well as other factors, including, market conditions, entity-specific factors, and information about the
Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, the company recognizes revenue when a performance obligation has been satisfied by transferring control of promised products or services to customers. This recognition occurs in an amount that reflects the consideration Epcon Communities expects to receive in exchange for those products or services.
The FDD states that contracts with Epcon Communities may include combinations of products and services, which are generally distinct and accounted for as separate performance obligations. Epcon Communities has determined that the licensing of intellectual property, which includes franchise fees and royalties, and advertising services are separate performance obligations. Advertising services are primarily performed through Epcon Communities Marketing Program, Inc.
For these arrangements, the contract transaction price is allocated to the separate performance obligations on a relative standalone selling price (SSP) basis. Epcon Communities determines the SSP based on an observable standalone selling price when it is available, as well as other factors, including market conditions, entity-specific factors, and information about the.