When are Face Foundrie's pre-opening services considered completed?

According to Face Foundrie's 2025 Franchise Disclosure Document, the company recognizes revenue from pre-opening services when these services have been completed. Generally, Face Foundrie considers these services completed upon the commencement of operations for the new franchise location. This means that Face Foundrie recognizes the revenue associated with those services at the time the franchisee begins operating their business.

Prior to 2023, Face Foundrie allocated the franchise fee between the pre-opening services and the franchise license, recognizing the license portion over the agreement's life. However, starting in 2023, the company determined that the fair value of pre-opening services exceeded the initial fees. As a result, the initial fees are now entirely allocated to pre-opening services.

For a prospective franchisee, this revenue recognition policy is important because it aligns Face Foundrie's financial interests with the successful launch of the franchise. Face Foundrie is incentivized to provide effective pre-opening support to ensure the franchisee can commence operations smoothly, as this is when they recognize the revenue for those services. This policy also reflects Face Foundrie's assessment that the value of their pre-opening support is substantial, exceeding the initial franchise fees they collect.