How does Goldfish Swim School recognize revenue from the franchise right granted to individual franchisees?
Goldfish_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
94,607, and $260,904, respectively, of cash is restricted for this purpose.
Notes to Consolidated Financial Statements
December 31, 2024, 2023, and 2022
Note 2 - Significant Accounting Policies (Continued)
Revenue Recognition
The Company earns revenue from its franchised schools, which includes royalties, franchise fees, brand fund fees, and technology fees. The Company sells individual franchisees the right to operate a school within a defined territory using the franchise name. The initial term of franchise agreements is typically 15 years, with an option to renew or transfer the franchise agreement to a new or existing franchisee.
Source: Item 22 — CONTRACTS (FDD pages 76–77)
What This Means (2025 FDD)
According to the 2025 FDD, Goldfish Swim School generates revenue from its franchised schools through several avenues. These include royalties, franchise fees, brand fund fees, and technology fees. Specifically, Goldfish Swim School grants franchisees the right to operate a swim school within a defined territory, utilizing the Goldfish Swim School name and system. The typical initial term for these franchise agreements is 15 years, with options available for renewal or transfer to another franchisee.
In addition to the initial franchise fee of $50,000 (with potential reductions for additional franchises), franchisees are obligated to pay ongoing fees. These include a monthly royalty fee of 6% of gross sales and a contribution to the brand fund, which can be up to 2% of gross sales. These fees are crucial for Goldfish Swim School as they represent the continuing revenue stream derived from the franchise operations.
For a prospective franchisee, understanding these revenue recognition methods is essential. The initial franchise fee represents the upfront cost of acquiring the rights to operate a Goldfish Swim School, while the ongoing royalties and brand fund contributions reflect the continuing costs associated with maintaining the franchise and benefiting from the brand's recognition and support. The 15-year term provides a substantial period for franchisees to recoup their investment and generate profit, but it also represents a long-term commitment to the Goldfish Swim School system.
It's important for potential franchisees to carefully evaluate these fees and consider them in their financial projections. Understanding how Goldfish Swim School recognizes revenue can provide insight into the franchisor's financial stability and its reliance on franchisee success. Prospective franchisees should also inquire about any additional fees or costs not explicitly mentioned in this section of the FDD to gain a comprehensive understanding of the financial obligations involved in operating a Goldfish Swim School franchise.