When does Gokhale Method recognize revenue from royalties when students participate in a class?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
Royalty revenue pertains to a pre-determined amount or percentage for each course taught based on the type of course taught and the number of participants. For royalties, revenue is recognized when students participate in the class. For many of these classes, the payment is processed or collected by GME or the teacher. If the payment is collected by GME, the royalties due to GMI on these classes are periodically remitted to GMI by GME. If the payment is collected by the teacher, GMI will record revenue for the net royalty due.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, Gokhale Method recognizes royalty revenue when students participate in a class. Royalties are based on a pre-determined amount or percentage for each course taught, which depends on the type of course and the number of participants.
The FDD states that payments for many classes are processed or collected either by Gokhale Method Enterprises (GME) or by the teacher. If GME collects the payment, they periodically remit the royalties due to Gokhale Method Institute (GMI). If the teacher collects the payment, GMI records revenue for the net royalty due.
This accounting practice means that a Gokhale Method franchisee's royalty obligations are tied directly to student participation. The franchisee will owe royalties as soon as a student attends a class. The method of payment collection (either by GME or the teacher) determines how GMI accounts for and receives the royalty payments. Prospective franchisees should ensure they understand the specific royalty rates for each type of course and the process for remitting royalty payments to GMI, based on who collects the initial payment from the student.