Does the Floors To Go franchise agreement mention a brokerage fee?
Floors_To_Go Franchise · 2025 FDDAnswer from 2025 FDD Document
differ from those estimates. Significant estimates include, but are not limited to, the franchisee cashback program accruals.
Cash
Cash consists of demand deposits in banks. The Company maintains its deposits in amounts which, at times, may exceed federally insured limits, in one local financial institution. Management does not believe the Company is exposed to any significant interest rate or other financial risk as a result of these deposits.
Revenue Recognition
Revenues are primarily derived from service fees, member advertising fees, and brokerage fees from certain floor and window covering manufacturers utilized by the franchisees. The performance obligation related to these services is met over the terms of the franchise agreement.
Source: Item 23 — RECEIPTS (FDD pages 47–204)
What This Means (2025 FDD)
According to the 2025 Floors To Go Franchise Disclosure Document, brokerage fees are indeed mentioned. Floors To Go's revenue is derived from service fees, member advertising fees, and brokerage fees from certain floor and window covering manufacturers utilized by the franchisees. The franchisor recognizes brokerage fees monthly based on the total amount of purchases made by the member franchisees and the terms of the contract.
Floors To Go recognizes revenue from brokerage fees over the term of the franchise agreement, indicating that this is an ongoing revenue stream tied to the franchisee's purchasing activity. The performance obligation for the franchisees and manufacturers are considered to be met over the terms of the franchise agreement.
For a prospective franchisee, this means that a portion of Floors To Go's revenue and potentially its profitability is tied to the purchasing behavior of its franchisees. It also suggests that Floors To Go has established relationships with specific floor and window covering manufacturers, which franchisees are expected to utilize. Understanding the terms of these contracts and the potential impact on product costs and franchisee profitability would be a crucial part of the due diligence process.