Under what accounting standard does Pearce Bespoke recognize revenue?

According to Pearce Bespoke's 2025 Franchise Disclosure Document, the company uses the accrual basis of accounting in accordance with U.S. GAAP (Generally Accepted Accounting Principles). This means that Pearce Bespoke recognizes revenue when it is earned, not necessarily when cash is received, and expenses are recorded when they are incurred, regardless of when payment is made.

For a prospective franchisee, this accounting method is important because it affects how Pearce Bespoke's financial performance is reported. The accrual method provides a more accurate picture of the company's profitability and financial position compared to the cash basis of accounting, which only recognizes revenue and expenses when cash changes hands. This is a common and generally accepted accounting practice in the United States.

Furthermore, the FDD notes that Pearce Bespoke defers recognition of initial franchise fee revenue until substantially all initial services required by the franchise agreement are performed. This means that Pearce Bespoke does not immediately recognize the entire initial franchise fee as revenue. Instead, it spreads the recognition of this revenue over a period of time, likely coinciding with the duration of the services they provide to help the franchisee get started. This is a conservative approach that aligns revenue recognition with the delivery of services, which is a standard practice in franchising.