Annual report pursuant to Section 13 and 15(d)

Franchise Operations

v3.8.0.1
Franchise Operations
 12 Months Ended
Dec. 31, 2017
Franchisors [Abstract]  
Franchise Operations
Franchise Operations
Results of franchise operations included in the consolidated statements of operations for the fiscal years ended December 31, 2017, December 25, 2016, and December 27, 2015 consist of the following (in thousands):
 
2017
 
2016
 
2015
Franchise royalties and fees:
 
 
 
 
 
Royalty income
$
11,019

 
$
11,196

 
$
12,478

Franchise fees
25

 
13

 
48

Total franchise royalties and fees
$
11,044

 
$
11,209

 
$
12,526


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.