How does Floors To Go recognize revenue from member advertising fees?

According to Floors To Go's 2025 Franchise Disclosure Document, the company recognizes revenue from member advertising fees over the term of the franchise agreement as the related expenses are incurred. Floors To Go also records deferred revenue for amounts received from franchisees for these member advertising fees. This means that when a franchisee pays their advertising fees, Floors To Go does not immediately recognize all of it as revenue. Instead, they defer the revenue recognition, spreading it out over the period that the franchise agreement is in effect.

This approach aligns the revenue recognition with the delivery of advertising and marketing services to the franchisees. By deferring the revenue, Floors To Go ensures that it only recognizes revenue as it fulfills its obligation to provide advertising and marketing support. This is a common accounting practice that provides a more accurate picture of the company's financial performance over time.

For a prospective Floors To Go franchisee, this means that the advertising fees they pay contribute to an advertising fund that is used to promote the products and services offered by Floors To Go members. The franchisor manages these funds and uses them for system-wide advertising efforts. The franchisee benefits from these advertising programs, and the revenue recognition method ensures that Floors To Go recognizes the revenue as it provides these benefits over the term of the franchise agreement.