When is royalty revenue recognized for Gokhale Method classes?
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, royalty revenue is tied to student participation in classes. Specifically, Gokhale Method recognizes royalty revenue when students participate in the class. The royalty amount is a pre-determined figure or percentage that varies based on the type of course and the number of participants.
The FDD further explains that payments for these classes are often handled either by Gokhale Method Enterprise, Inc. (GME) or by the teacher themselves. When GME collects the payment, they periodically remit the royalties due to Gokhale Method Institute, Inc. (GMI). If the teacher collects the payment, GMI will record revenue for the net royalty due.
This revenue recognition policy means that a Gokhale Method franchisee's royalty obligations are directly linked to class attendance. Franchisees should ensure accurate tracking of student participation to properly account for royalty payments. The distinction between payments collected by GME versus the teacher is also important for franchisees to understand, as it affects how and when GMI records the royalty revenue.