For Fly Fitness, when is revenue recognized?

According to Fly Fitness's 2024 Franchise Disclosure Document, revenue is recognized when goods or services are transferred to customers. The amount recognized reflects the consideration Fly Fitness expects to receive in exchange for those goods or services.

This accounting practice, known as accrual-based revenue recognition, is standard across industries and dictates that revenue is recorded when earned rather than when cash is received. For a Fly Fitness franchisee, this means that if they provide fitness classes or sell merchandise, they recognize the revenue at the time of service or sale, regardless of when the customer actually pays.

Understanding this policy is crucial for franchisees as it impacts their financial reporting and tax obligations. Franchisees should ensure they have systems in place to accurately track when goods and services are transferred to customers to properly recognize revenue. This will help in creating accurate financial statements and managing their business effectively.