Over what period does Moes Southwest Grill anticipate recognizing revenue for unopened SBRs?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
s of open SBRs over time. The Company's other revenue streams are generally recognized at a point in time.
Franchise revenues are disaggregated by the timing of recognition as follows:
| Definite-lived intangibles: | ||||
|---|---|---|---|---|
| Franchise agreements | 13 | $ 16,916 | $ (8,522) | $ 8,394 |
| Reacquired fr |
Source: Item 23 — Receipts (FDD pages 92–334)
What This Means (2025 FDD)
According to the 2025 FDD, Moes Southwest Grill defers revenue recognition for unopened SBRs (Store Business Records) until the stores actually open. The company anticipates recognizing this deferred revenue over the term of the franchise agreements. These agreements typically span a period of 10 to 20 years.
This means that the initial franchise fees and other payments received from franchisees before they open their Moes Southwest Grill location are not immediately recognized as revenue on the company's financial statements. Instead, these amounts are recorded as deferred revenue, a liability on the balance sheet, which represents the company's obligation to provide the services and support associated with the franchise agreement in the future.
Once the Moes Southwest Grill location opens, the company begins to recognize the deferred revenue as actual revenue over the 10 to 20 year term of the franchise agreement. This is a common accounting practice in franchising, as it aligns revenue recognition with the period during which the franchisor provides ongoing services and support to the franchisee. This approach provides a more accurate picture of the company's financial performance by matching revenue with the related expenses and obligations over the life of the franchise agreement.