How does Ledgers recognize monthly advertising fees?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
Monthly franchise royalties (the greater of 14% of gross receipts or the annual minimum as outlined in the executed franchise agreement) and monthly advertising fees (3% of gross revenues) pursuant to the franchise agreements, are recognized monthly at a point in time consistent with the period in which the franchisee sales are generated.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, monthly advertising fees, which are 3% of gross revenues, are recognized monthly at a point in time consistent with the period in which the franchisee sales are generated. This means that Ledgers recognizes the advertising fees as revenue in the same month that the franchisee earns the revenue on which those fees are based.
For a prospective Ledgers franchisee, this means that the 3% advertising fee, calculated from the previous month's gross revenue, is recognized by Ledgers as their revenue in that same month. This accounting practice aligns the recognition of advertising revenue with the franchisee's sales activity, providing a clear and consistent approach to financial reporting.
This revenue recognition method is fairly standard in the franchise industry, where franchisors typically collect and recognize advertising fees on a monthly or quarterly basis, corresponding to the franchisee's sales cycle. This ensures that the franchisor's revenue from advertising fees is directly tied to the franchisee's business performance.