What are the primary sources of revenue for Fly To Fit?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
Revenues are primarily derived from franchise fees (one-time and recurring monthly fees). In accordance with Accounting Standards Codification (ASC) Topic 606, Revenue will be recognized when persuasive evidence of an arrangement exists, delivery has occurred, or services have been rendered, the seller's price to the buyer is fixed or determinable, and collectability is reasonable assured. The determination of whether fees and fixed or determinable and collection is reasonable assured involves the use of assumptions. Arrangement terms and customer information are evaluated to ensure that these criteria are met prior to recognition of revenue.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, the company's revenues are primarily derived from franchise fees. These fees consist of both one-time initial franchise fees and recurring monthly fees paid by franchisees.
Fly To Fit recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. This means Fly To Fit must be confident they can collect the fees before recognizing them as revenue.
The company's performance obligation under the franchise agreement includes granting rights to access their intellectual property and pre-opening activities such as initial training. Fly To Fit accounts for pre-opening activities that are not brand specific as a separate performance obligation, recognizing revenue as these services are rendered. The remaining portion of the franchisee fee, not allocated to these pre-opening activities, is recorded as unearned revenue and recognized over the term of the franchise agreement.