Deferred Franchise and Development Fees
Our deferred franchise and development fees consist of the unrecognized fees received from franchisees. Recognition of these fees in subsequent periods is based on satisfaction of the contractual performance obligations of the active contracts with franchisees. We also expect to earn subsequent period royalties and advertising fees related to our franchise contracts; however, due to the variability and uncertainty of these future revenues based upon a sales-based measure, these future revenues are not yet estimable as the performance obligations remain unsatisfied. Deferred franchise and development fees are classified within Other accrued liabilities for the current portion expected to be recognized within the next 12 months and Other liabilities for the long-term portion in the Consolidated Balance Sheets.
The following table reflects the changes in deferred franchise and development fees for the fiscal years ended on June 25, 2025 and June 26, 2024:
| | | | | | | | | | | |
| |
| June 25, 2025 | | June 26, 2024 |
| Beginning balance | $ | 9.7 | | | $ | 11.1 | |
| Additions | 1.5 | | | 0.6 | |
| | | |
| Amount recognized to Franchise revenues | (1.4) | | | (2.0) | |
| Ending balance | $ | 9.8 | | | $ | 9.7 | |
The following table illustrates franchise and development fees expected to be recognized in the future related to performance obligations that were unsatisfied or partially unsatisfied as of June 25, 2025:
| | | | | |
| Fiscal Year | Franchise and Development Fees Revenue Recognition |
| 2026 | $ | 0.8 | |
| 2027 | 0.8 | |
| 2028 | 0.7 | |
| 2029 | 0.6 | |
| 2030 | 0.5 | |
| Thereafter | 6.4 | |
| $ | 9.8 | |
Deferred Gift Card Revenues
Total deferred revenues related to our gift cards include the full value of unredeemed gift card balances less recognized breakage and the unamortized portion of third-party fees. The following table reflects the changes in the Gift card liability for fiscal years ended on June 25, 2025 and June 26, 2024:
| | | | | | | | | | | |
| |
| June 25, 2025 | | June 26, 2024 |
| Beginning balance | $ | 64.8 | | | $ | 73.0 | |
| Gift card sales | 122.8 | | | 122.2 | |
| Gift card redemptions recognized to Company sales | (120.4) | | | (119.5) | |
Gift card breakage recognized to Company sales | (10.0) | | | (11.1) | |
| Other | — | | | 0.2 | |
| Ending balance | $ | 57.2 | | | $ | 64.8 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.