Does Ledgers generate revenue from franchise fees?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
edit losses by considering a number of factors, including the length of time accounts receivable are due, previous loss history, the customer's current ability to pay its obligation and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited against credit loss expense. Management has determined their is no allowance for credit losses related to royalty receivables as of December 31, 2024, 2023, and 2022.
Revenue Recognition
The Company generates revenue from three primary sources: (1) franchise fees and area representative sales, (2) royalty fees generated from franchisees and (3) referral fees earned from vendors.
The Company offers an Area Representative Agreement ("ARA") for the development rights of an area and a predetermined number of territories that the ARA would be allowed to sell, with a minimum number that the ARA shall develop. The ARA fee is $10,000 per territory and is nonrecurring and nonrefundable.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, the company does generate revenue from franchise fees. Ledgers' revenue comes from three primary sources: franchise fees and area representative sales, royalty fees from franchisees, and referral fees from vendors.
Specifically, Ledgers offers an Area Representative Agreement (ARA) for area development rights, charging $10,000 per territory. This ARA fee is nonrecurring and nonrefundable. Additionally, each franchisee enters into a franchise agreement or ARA to license the Ledgers brand, which includes an initial license fee, monthly royalty fees, and advertising fees based on a percentage of the franchisee's gross revenue.
Ledgers recognizes revenue from the sale of initial franchise and ARA licenses over the agreement's life, typically 5-10 years, upon satisfying performance obligations. Initial franchise fees and ARA fees received before revenue recognition are recorded as deferred revenue. This means that Ledgers receives franchise fees upfront and recognizes them as revenue over time as they fulfill their obligations to the franchisee.