What is Kitchen Solvers' performance obligation to franchisees in exchange for the monthly business development and royalty fees?

According to Kitchen Solvers's 2025 Franchise Disclosure Document, franchisees are required to pay two monthly fees to the company: a business development fee, which is 1% of the franchisee's gross monthly sales, and a royalty fee, which ranges from 2.5% to 6.0% of gross sales depending on the amount of gross sales. In exchange for these fees, Kitchen Solvers's performance obligation is to provide franchisees with continuous access to the company's licenses, products, and materials. The revenue for these fees is recognized monthly as they are earned.

In simpler terms, Kitchen Solvers charges franchisees a percentage of their monthly sales for business development and royalties. The business development fee is a flat 1% of gross monthly sales, while the royalty fee varies between 2.5% and 6.0% depending on the franchisee's sales volume. In return for these ongoing fees, Kitchen Solvers provides franchisees with continuous access to its brand, resources, and proprietary information necessary to operate the franchise.

This arrangement is typical in franchising, where franchisees pay ongoing fees for the use of the franchisor's brand, systems, and support. The continuous access to licenses, products, and materials is crucial for franchisees to maintain brand standards and effectively serve their customers. The fact that Kitchen Solvers recognizes this revenue monthly indicates that they are providing these services on an ongoing basis, aligning their revenue recognition with their performance obligations.