How does Pearce Bespoke handle the accounting for advertising costs?

According to Pearce Bespoke's 2025 Franchise Disclosure Document, the company has established a brand fund to manage regional and national advertising efforts for the benefit of its franchisees. Franchisees contribute to this fund through a fee of 2% of their weekly gross sales, which is billed weekly. Pearce Bespoke recognizes this revenue when earned, but only up to the amount actually spent on marketing activities as outlined in the Franchise Disclosure Document.

Pearce Bespoke retains the right to increase this advertising fee up to 3% of gross revenues in the future. Any funds collected from franchisees for the brand fund that have not yet been spent on marketing are recorded as deferred revenue on the company's balance sheet. As of December 31, 2024, the company reported that $0 was held as deferred revenue in the brand fund.

For a prospective Pearce Bespoke franchisee, this means that 2% of their weekly gross sales will be allocated to a brand fund, which the franchisor will use for advertising. The franchisee can expect that these funds will be used for regional and national advertising. The franchisee should review the Franchise Disclosure Document to understand what marketing activities qualify for these funds. It is also important to note that Pearce Bespoke can increase this fee to 3% of gross revenues, which would further increase the amount contributed to the brand fund.