What is the term length over which Pearce Bespoke recognizes unearned initial fee revenues?

According to Pearce Bespoke's 2025 Franchise Disclosure Document, unearned initial fee revenues from franchisee acquisition and acceptance are recorded as deferred revenue. Pearce Bespoke recognizes this deferred revenue over the term of the franchise agreement, which is currently 10 years.

This means that Pearce Bespoke does not recognize the entire initial franchise fee as revenue immediately upon signing the franchise agreement. Instead, they spread the recognition of this revenue over the entire 10-year term of the agreement. This accounting practice aligns the revenue recognition with the period during which the franchisee benefits from the franchise rights and support provided by Pearce Bespoke.

For a prospective franchisee, this indicates that Pearce Bespoke's financial statements provide a more accurate picture of their ongoing revenue stream. It also suggests that Pearce Bespoke has a vested interest in the long-term success of its franchisees, as their revenue recognition is tied to the duration of the franchise agreement. This is a fairly standard practice in the franchise industry, as it reflects the ongoing nature of the franchisor-franchisee relationship.