When are royalty fees recognized as revenue for Expense Reduction Analysts?

According to Expense Reduction Analysts' 2025 Franchise Disclosure Document, royalty fees, which are 15% of gross billings, are recognized as revenue when receipts from client billings are received. These fees compensate Expense Reduction Analysts for the ongoing support services provided to the franchisee and are subject to a variable minimum fee.

This means that Expense Reduction Analysts recognizes royalty revenue only when the franchisee's clients actually pay their bills. This policy aligns the franchisor's revenue recognition with the actual cash flow generated by the franchisee's operations. The royalty fee is based on gross billings and is payable when client billings are rendered.

For a prospective Expense Reduction Analysts franchisee, this revenue recognition policy implies that the franchisee's royalty obligations are directly tied to their ability to generate revenue from clients. The franchisee will owe 15% of gross billings as a royalty fee, and this fee is recognized as revenue by Expense Reduction Analysts only when the client payments are received. This arrangement could help to align the financial interests of both the franchisor and the franchisee, as the franchisor benefits when the franchisee is successful in securing and collecting payments from clients.