How is revenue from owned locations reported by Management Recruiters?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
on exposure. We present franchise royalty fees net of these incentives and credits.
For owned locations, we account for revenue when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Revenue derived from owned locations is recognized at the time we satisfy our performance obligation. Our contracts have a single performance obligation, which is the transfer of services. Because our customers receive and consume the benefits of our services simultaneously, our performance obligations are satisfied when our services are provided. Revenue from owned locations is reported net of customer credits, discounts, and taxes collected from customers that are remitted to taxing authorities. Our customers are invoiced every week and we do not require payment prior to the delivery of service. Substantially all of our contracts include payment terms of 30 days or less and are short-term in nature. Because of our payment terms with our customers, there are no significant contract assets or liabilities. We do not extend payment terms beyond one year.
We currently operate under a single segment.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 65–66)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, revenue from owned locations is recognized when both parties have approved the contract, the rights and obligations are identified, payment terms are identified, and collectability of consideration is probable. Specifically, revenue is recognized when Management Recruiters satisfies its performance obligation, which is the transfer of services. Since customers receive and consume the benefits of these services simultaneously, the performance obligations are satisfied when the services are provided.
For owned locations, Management Recruiters reports revenue net of customer credits, discounts, and taxes collected from customers that are then remitted to taxing authorities. Customers are invoiced weekly, and payment is typically not required before the service is delivered. The contracts generally include payment terms of 30 days or less, which are considered short-term.
Because of these payment terms, Management Recruiters does not have significant contract assets or liabilities, and payment terms do not extend beyond one year. In 2021, Staffing revenue from owned locations was $230,668. Cost of staffing revenue at owned locations consists of temporary employee wages, the related payroll taxes, workers' compensation expenses, and other direct costs of services.