How did Healthsource Chiropractic apply ASC 606, concerning revenue from contracts with customers?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
hise Sales Agreements | $_ | 75,200 |
NOTE K – MEMBERS' AND STOCKHOLDERS' EQUITY:
On March 20, 2022 the Company finalized a tax-free reorganization under IRC Section 368. As part of the reorganization, the Company now has 1,000 Class A Units, 1,000 Class B Units, and 1,000 Class C Units; none with a par value.
As of December 31, 2024, ZCS Holdings, Inc. holds 700 Class A Units and FW – HES Holdings, LLC holds 300 Class B Units.
The remaining authorized units have not been issued and are still outstanding.
NOTE L – RELATED PARTY TRANSACTIONS:
The details concerning related party transactions are included in Note D – Advance Receivable – Affiliates, Note I – Note Payable – Member, Note O – Related Party Leases, and Note P – Operating leases.
NOTE M - REVENUE:
Franchise Agreements
Franchise agreement revenue is derived from the sale or transfer of chiropractic franchises across the United States. The pre-opening services are distinct from the franchise license and are accounted for as a single performance obligation. Sales prices for new franchises range from $45,000 to $60,000, and depends on the number of franchises being purchased. To transfer a
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, franchise agreement revenue is derived from the sale or transfer of chiropractic franchises across the United States. The pre-opening services are distinct from the franchise license and are accounted for as a single performance obligation. The sales prices for new franchises range from $45,000 to $60,000, depending on the number of franchises being purchased. The fee to transfer a franchise is $10,000.
In 2024, Healthsource Chiropractic sold 16 franchises, 21 in 2023, and 36 in 2022. At the end of 2024, there were 184 Healthsource franchises, 187 at the end of 2023, and 179 at the end of 2022, none of which were owned by HealthSource Chiropractic, Inc. There were 132 franchisees in operation as of December 31, 2024.
Healthsource Chiropractic also generates revenue through royalty payments, which are calculated at seven percent (7%) of sales and are payable monthly by franchisees. Additionally, the company collects termination fees, which are agreed-upon sums resulting from a franchisee terminating the franchise agreement before its expiration date. The company also generates revenue from the National Ad Fund.