When are royalty revenues recognized as revenue by Pearce Bespoke?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
Revenues related to the license are continuing royalties of 10% of gross sales, subject to a minimum royalty as defined in the franchise agreement. Royalty revenues are compensation for the use of the license in the territory, over the term of the contract, and will be used in part to continue the development of the Company's brand, the franchise system and provide on-going support for the Company's franchisees. The royalties are billed weekly and are recognized as revenue when earned.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, royalty revenues are recognized as revenue when earned. These royalties are compensation for using Pearce Bespoke's license within the franchisee's territory over the contract term. These royalties support the continued development of the Pearce Bespoke brand, the franchise system, and ongoing franchisee support.
The standard royalty is 10% of gross sales, although the franchise agreement specifies a minimum royalty amount. The royalties are billed weekly.
For a prospective franchisee, this means that a portion of their weekly gross sales (or a minimum amount) will be remitted to Pearce Bespoke as compensation for the continued use of the brand's trademarks, systems, and support. Understanding how these royalties are calculated and when they are due is crucial for managing the franchisee's cash flow and profitability.