Royalties and Fees	9 Months Ended
Sep. 30, 2021
Royalties and Fees
Note 2 - Royalties and Fees	Note 2 – Royalties and fees included initial franchise fees of $24,000 for the three-month period ended September 30, 2021, and $42,500 for the three-month period ended September 30, 2020. Royalties and fees included equipment commissions of $2,221 for the three-month period ended September 30, 2021, and $6,674 for the three-month period ended September 30, 2020. Royalties and fees, including amortized initial franchise fees and equipment commissions, were $1.2 million for the three-month period ended September 30, 2021, and $1.3 million for the three-month period ended September 30, 2020. Royalties and fees, including amortized initial franchise fees and equipment commissions, were $3.4 million for the nine-month period ended September 30, 2021 and $3.8 million for the comparable period in 2020. 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. The effect on comparable periods within the financial statements by recording franchise fees and cost of opening the units as deferred contract costs and deferred contract income is not material as the initial franchise fee for the non-traditional franchise is intended to defray the initial contract costs, and the franchise 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 deferred costs were both $826,000 on September 30, 2021. At December 31, 2020 and September 30, 2021, the carrying values of the Company’s franchise receivables have been reduced to anticipated realizable value. After considering this reduction of carrying value, the Company anticipates that substantially all of its accounts receivables reflected on the consolidated balance sheet as of September 30, 2021, will be collected. In 2020, in light of the additional uncertainty created as a result of the COVID 19 pandemic, the Company created an allowance for uncollectability on all long-term franchisee receivables. The Company will continue to pursue collection where circumstances are appropriate and all collections of these receivables in the future will result in additional royalty income at the time received. There were 3,064 franchises/licenses in operation on December 31, 2020 and the same number of franchises/licenses were in operation on September 30, 2021. During the nine-month period ended September 30, 2021 there were 21 new outlets opened and 17 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 2,404 licensed grocery store units included in the counts above have left the system.

Royalties and Fees

9 Months Ended

Sep. 30, 2021

Note 2 – Royalties and fees included initial franchise fees of $24,000 for the three-month period ended September 30, 2021, and $42,500 for the three-month period ended September 30, 2020. Royalties and fees included equipment commissions of $2,221 for the three-month period ended September 30, 2021, and $6,674 for the three-month period ended September 30, 2020. Royalties and fees, including amortized initial franchise fees and equipment commissions, were $1.2 million for the three-month period ended September 30, 2021, and $1.3 million for the three-month period ended September 30, 2020. Royalties and fees, including amortized initial franchise fees and equipment commissions, were $3.4 million for the nine-month period ended September 30, 2021 and $3.8 million for the comparable period in 2020. 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.

The effect on comparable periods within the financial statements by recording franchise fees and cost of opening the units as deferred contract costs and deferred contract income is not material as the initial franchise fee for the non-traditional franchise is intended to defray the initial contract costs, and the franchise 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 deferred costs were both $826,000 on September 30, 2021.

At December 31, 2020 and September 30, 2021, the carrying values of the Company’s franchise receivables have been reduced to anticipated realizable value. After considering this reduction of carrying value, the Company anticipates that substantially all of its accounts receivables reflected on the consolidated balance sheet as of September 30, 2021, will be collected. In 2020, in light of the additional uncertainty created as a result of the COVID 19 pandemic, the Company created an allowance for uncollectability on all long-term franchisee receivables. The Company will continue to pursue collection where circumstances are appropriate and all collections of these receivables in the future will result in additional royalty income at the time received.

There were 3,064 franchises/licenses in operation on December 31, 2020 and the same number of franchises/licenses were in operation on September 30, 2021. During the nine-month period ended September 30, 2021 there were 21 new outlets opened and 17 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 2,404 licensed grocery store units included in the counts above have left the system.