When is revenue from the sales of proprietary chili recognized by Gold Star?

According to Gold Star's 2025 Franchise Disclosure Document, revenue from the sales of their proprietary chili is recognized when the distributors ship the franchisee's order. At this point, Gold Star recognizes the revenue, which results in accounts receivable on the balance sheet. This is considered revenue recognition at a "point in time."

For a Gold Star franchisee, this means that Gold Star recognizes the revenue from the chili sales to the franchisee as soon as it ships. This accounting practice is important for franchisees to understand, as it affects how Gold Star's financial performance is reported. Franchisees are required to purchase proprietary chili from Gold Star, making this a significant revenue stream for the franchisor.

This revenue recognition method is fairly standard. Recognizing revenue upon shipment is a common practice in industries where physical goods are sold, as it signifies the transfer of control and risk to the buyer. Franchisees should be aware of this policy, as it ensures that Gold Star's financial statements accurately reflect the timing of revenue earned from these mandatory purchases.