XML 18 R8.htm IDEA: XBRL DOCUMENT v3.20.2
2. Royalties and Fees
6 Months Ended
Jun. 30, 2020
Revenue Recognition [Abstract]  
Royalties and Fees

Franchising revenue included initial franchise fee amortization of $76,000 for the three-month period ended June 30, 2020, and $101,000 for the six-month period ended June 30, 2019, compared to $116,000 and $210,500 for the respective three-month and six-month periods ended June 30, 2019. Franchising revenue included equipment commissions of $14,000 and $18,000 for the respective three-month and six-month periods ended June 30, 2020, and $8,000 and $28,000 for the respective three-month and six-month periods ended June 30, 2019. Franchising revenue, less amortized initial franchise fees and equipment commissions, were $999,000 and $2.4 million for the respective three-month and six-month periods ended June 30, 2020, and $1.5 million and $3.0 for the respective three-month and six-month periods ended June 30, 2019. 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.

 

Since 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 effect to comparable periods within the financial statements is not material. The deferred contract income and costs both approximated $808,000 on June 30, 2020.

 

At December 31, 2019 and June 30, 2020, the Company reported net accounts receivable from former franchisees of $4.4 million and $4.8 million, respectively, which was net of allowance of $4.3 million at December 31, 2019 and allowance of $4.8 million as of June 30, 2020.

 

There were 3,064 franchises/licenses in operation on December 31, 2019 and 3,058 franchises/licenses in operation on June 30, 2020. During the six-month period ended June 30, 2020, there were 12 new outlets opened and 18 outlets closed. In the ordinary course, grocery stores from time to time add the Company's licensed products, remove them and may subsequently re-offer them. Therefore, it is unknown how many of the 2,402 licensed grocery store units included in the counts above have left the system.