Annual report pursuant to Section 13 and 15(d)

Franchise Operations

v3.6.0.2
Franchise Operations
 12 Months Ended
Dec. 25, 2016
Franchisors [Abstract]  
Franchise Operations
Franchise Operations
Results of franchise operations included in the Consolidated Statements of Income for the fiscal years ended December 25, 2016, December 27, 2015, and December 28, 2014 consist of the following (in thousands):
 
2016
 
2015
 
2014
Franchise royalties and fees:
 
 
 
 
 
Royalty income
$
11,196

 
$
12,478

 
$
13,540

Franchise fees
13

 
48

 
97

Total franchise royalties and fees
$
11,209

 
$
12,526

 
$
13,637


The Company provides management expertise, training, pre-opening assistance, and restaurant operating assistance in exchange for area development fees, franchise fees, license fees, and royalties of 4% of the franchised restaurant sales pursuant to the franchise agreements. Franchise fee revenue is recognized when all material obligations and initial services to be provided by the Company have been performed, generally upon the opening of the new restaurant. Until earned, these fees are accounted for as deferred revenue. Area development fees are dependent upon the number of restaurants in the territory as well as the Company’s obligations under the area franchise agreement. Consequently, as the Company’s obligations are met, area development fees are recognized proportionately with the opening of each new restaurant. Royalties are accrued as earned and are calculated each period based on the franchisee’s reported adjusted sales.