How does Face Foundrie handle gift card purchases and the associated liability across all locations?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
irectly or indirectly to future cash flows. Intangible assets with finite lives are reviewed for impairment if events or changes in circumstances indicate that the carrying value might not be recoverable.
Software costs are amortized over five years using the straight-line method.
(l) Gift Card Liability
The Company processes gift card purchases for all locations and recognizes a gift card liability in the amount of the unredeemed gift cards as of year-end. The Company then reimburses each location when the gift cards are redeemed.
(m) Revenue Recognition
As of January 1, 2023, the Company adopted ASC 606, Revenue from Contracts with Customers.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 73)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, the company processes gift card purchases for all locations. Face Foundrie recognizes a gift card liability equivalent to the amount of unredeemed gift cards at the end of each year. When gift cards are redeemed at a location, Face Foundrie reimburses that specific location for the amount redeemed.
As of December 31, 2024, Face Foundrie had $3,480,620 in cash and cash equivalents, with $2,326,400 specifically set aside to cover the gift card liability. In the previous years, $1,458,965 was set aside out of $1,969,123 in cash and cash equivalents as of December 31, 2023, and $700,015 was set aside as of December 31, 2022.
This arrangement centralizes the management of gift card liabilities at the company level, which could simplify financial tracking and reconciliation for individual franchisees. However, franchisees should ensure they understand the reimbursement process and timing to manage their cash flow effectively. The setting aside of specific cash amounts to cover the gift card liability indicates a financially conservative approach by Face Foundrie, which may provide reassurance to franchisees regarding the company's ability to meet these obligations.