What happens if a card member of The Standardx does not redeem their promotional awards?

According to The Standardx's 2025 Franchise Disclosure Document, revenues allocated to loyalty program points and free night awards are deferred. These revenues are recognized as reimbursed costs on the company's consolidated statements of income upon the redemption or expiration of a card member's promotional awards, after deducting redemption expenses when The Standardx acts as the agent.

This means that if a card member does not redeem their promotional awards, The Standardx will eventually recognize the deferred revenue as income once the awards expire. The initial revenue from the sale or activity that generated the award points is not recognized until either the points are used or they pass their expiration date. This accounting practice ensures that The Standardx only recognizes revenue when the obligation to provide the award is fulfilled or lapses.

For a prospective franchisee, this detail highlights how The Standardx accounts for its loyalty program liabilities and revenues. It indicates that unredeemed awards contribute to the company's financial performance by eventually converting deferred revenue into recognized revenue. Franchisees should understand how the loyalty program impacts their assessment fees and how the redemption rates influence the overall financial model.