2. Royalties and Fees	9 Months Ended
Sep. 30, 2018
Notes to Financial Statements
2. Royalties and Fees	Royalties and fees included initial franchise fees of $42,000 and $164,000 for the three-month and nine-month periods ended September 30, 2017, and $97,000 and $217,000 for the three-month and nine-month periods ended September 30, 2018, respectively. Royalties and fees included equipment commissions of $16,000 and $34,000 for the three-month and nine-month periods ended September 30, 2017, and $22,000 and $63,000 for the three-month and nine-month periods ended September 30, 2018, respectively. Royalties and fees, less initial franchise fees and equipment commissions, were $1.7 million and $4.9 million for the respective three-month and nine-month periods ended September 30, 2017, and $1.5 million and $4.5 million for the respective three-month and nine-month periods ended September 30, 2018. Most of the cost for the services required to be performed by the Company are incurred prior to the franchise fee income being recorded, which is based on a contractual liability of the franchisee. In accordance with Accounting Standards Update ("ASU") 2014-09, the Company adopted revenue and expense recognition as described in ASU 2014-09 effective January 2018. Initial franchise fees and related contract costs are deferred and amortized on a straight-line basis over the term of the franchise agreement, generally five to 10 years. The effect to comparable periods within the financial statements is not material as the initial franchise fee for the non-traditional franchise is intended to defray the initial contract costs, and the franchisee fees and contract costs initially incurred and paid approximate the relative amortized franchise fees and contract costs for those same periods. The deferred contract income and costs both approximated $592,000 on September 30, 2018. At December 31, 2017 and September 30, 2018, the Company reported net accounts receivable from franchisees of $7.8 million and $6.9 million, respectively, which were both net of allowances of $1.5 million. There were 2,854 franchises/licenses in operation on December 31, 2017 and 2,886 franchises/licenses in operation on September 30, 2018. During the nine-month period ended September 30, 2018, there were 47 new outlets opened and 15 outlets closed. In the ordinary course, grocery stores from time to time add our licensed products, remove them and may subsequently re-offer them. Therefore, it is unknown how many of the 2,122 licensed grocery store units included in the counts above have left the system.

2. Royalties and Fees

9 Months Ended

Sep. 30, 2018

Royalties and fees included initial franchise fees of $42,000 and $164,000 for the three-month and nine-month periods ended September 30, 2017, and $97,000 and $217,000 for the three-month and nine-month periods ended September 30, 2018, respectively. Royalties and fees included equipment commissions of $16,000 and $34,000 for the three-month and nine-month periods ended September 30, 2017, and $22,000 and $63,000 for the three-month and nine-month periods ended September 30, 2018, respectively. Royalties and fees, less initial franchise fees and equipment commissions, were $1.7 million and $4.9 million for the respective three-month and nine-month periods ended September 30, 2017, and $1.5 million and $4.5 million for the respective three-month and nine-month periods ended September 30, 2018. Most of the cost for the services required to be performed by the Company are incurred prior to the franchise fee income being recorded, which is based on a contractual liability of the franchisee.

In accordance with Accounting Standards Update ("ASU") 2014-09, the Company adopted revenue and expense recognition as described in ASU 2014-09 effective January 2018. Initial franchise fees and related contract costs are deferred and amortized on a straight-line basis over the term of the franchise agreement, generally five to 10 years.

The effect to comparable periods within the financial statements is not material as the initial franchise fee for the non-traditional franchise is intended to defray the initial contract costs, and the franchisee fees and contract costs initially incurred and paid approximate the relative amortized franchise fees and contract costs for those same periods.

The deferred contract income and costs both approximated $592,000 on September 30, 2018.

At December 31, 2017 and September 30, 2018, the Company reported net accounts receivable from franchisees of $7.8 million and $6.9 million, respectively, which were both net of allowances of $1.5 million.

There were 2,854 franchises/licenses in operation on December 31, 2017 and 2,886 franchises/licenses in operation on September 30, 2018. During the nine-month period ended September 30, 2018, there were 47 new outlets opened and 15 outlets closed. In the ordinary course, grocery stores from time to time add our licensed products, remove them and may subsequently re-offer them. Therefore, it is unknown how many of the 2,122 licensed grocery store units included in the counts above have left the system.