How does Ledgers recognize monthly franchise royalties?
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, the company recognizes monthly franchise royalties at a specific point in time. These royalties, which are the greater of 14% of gross receipts or the annual minimum outlined in the franchise agreement, are recognized monthly. This recognition aligns with the period in which the franchisee generates their sales.
In simpler terms, Ledgers accounts for the royalty fees in the same month that the franchisee makes the sales that generate those royalties. This approach provides a consistent and transparent method of revenue recognition for Ledgers. It also means that the royalty revenue is tied directly to the franchisee's performance during that specific month.
For a prospective Ledgers franchisee, this means that the royalties you pay each month directly correlate with your sales for that month. The royalty payment is due on the 10th day of each month based on the Gross Revenue from the preceding month. This system ensures that Ledgers' income from royalties accurately reflects the franchisee's business activity and revenue generation.