How does Punch King Fitness recognize revenue from franchisees?

According to Punch King Fitness's 2024 Franchise Disclosure Document, the company recognizes revenue from franchise fees when it provides the initial agreed-upon services and the franchisee has commenced operations. This means that Punch King Fitness does not recognize the franchise fee as revenue until it has fulfilled its obligations to help the franchisee get started, and the franchisee has actually opened for business.

In addition to franchise fees, Punch King Fitness also recognizes revenue from franchise royalty fees during the term of the franchise agreement. This indicates that Punch King Fitness receives ongoing royalty payments from its franchisees based on their sales or revenue. The royalty revenue is recognized over the life of the franchise agreement as the franchisee continues to operate their Punch King Fitness location.

In summary, Punch King Fitness uses a combination of initial franchise fees and ongoing royalty fees to generate revenue from its franchisees. The initial franchise fee revenue is recognized when the services are rendered and the franchisee begins operations, while the royalty fee revenue is recognized throughout the term of the franchise agreement.