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Revenue
 9 Months Ended
Sep. 30, 2022
Revenue from Contract with Customer [Abstract]  
Revenue Revenue
Commissions and fees
The Company earns new and renewal commissions paid by insurance Carriers and fees paid by its clients for the binding of insurance coverage. The transactions price is set as the estimated commissions to be received over the term of the policy based on an estimate of premiums placed, policy changes and cancellations, net of a constraint. These commissions and fees are earned at a point in time upon the effective date of bound insurance coverage, as no performance obligation exists after coverage is bound.
For Agency Fees, the Company enters into a contract with the insured, in which the Company's performance obligation is to place an insurance policy. The transaction price of the agency fee is set at the time the sale is agreed upon, and is included in the contract. Agency Fee revenue is recognized at a point in time, which is the effective date of the policy.
Contingent commission revenue is generated from contracts between the Company and insurance carriers, for which the Company is compensated for certain growth, profitability, or other performance-based metrics. The performance obligations for contingent commissions will vary by contract, but generally include the Company increasing profitable written premium with the insurance carrier. The transaction price for contingent commissions is estimated based on all available information and is recognized over time as the Company completes its performance obligations, as the underlying policies are placed, net of a constraint.
Franchise revenues
Franchise revenues include initial franchise fees and ongoing new and renewal royalty fees from franchisees.

Revenue from initial franchise fees is generated from a contract between the Company and a franchisee. The Company's performance obligation is to provide initial training, onboarding, ongoing support and use of the Company's business operations over the period of the franchise agreement. The transaction price is set by the franchise agreement and revenue is recognized over time as the Company completes its performance obligations.
Revenue from new and renewal royalty fees is recorded by applying the sales- and usage-based royalties exception. Under the sales- and usage-based exception, the Company estimates the anticipated amount of the royalties to be received over the term of the policy based on an estimate of premiums placed by the franchisee, policy changes, and cancellations, net of a constraint. Revenue from royalty fees is recognized over time as the placement of the underlying policies occur.
Contract costs
The Company has evaluated ASC Topic 340 - Other Assets and Deferred Cost (“ASC 340”) which requires companies to defer certain incremental cost to obtain customer contracts, and certain costs to fulfill customer contracts.
Incremental cost to obtain - The adoption of ASC 340 resulted in the Company deferring certain costs to obtain customer contracts primarily as they relate to commission-based compensation plans for the franchise sales team, in which the Company pays an incremental amount of compensation on new Franchise Agreements. These incremental costs are deferred and amortized over a 10-year period, which is consistent with the term of the contract.
Costs to fulfill - The Company has evaluated the need to capitalize costs to fulfill customer contracts and has determined that there are no costs that meet the definition for capitalization under ASC 340.
Disaggregation of Revenue
The following table disaggregates revenue by source (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Type of revenue stream:
Commissions and agency fees
Renewal Commissions$16,485 $10,969 $41,233 $29,036 
New Business Commissions6,215 6,013 18,312 16,573 
Agency Fees2,740 3,050 8,491 8,579 
Contingent Commissions1,962 2,388 5,640 6,819 
Franchise revenues
Renewal Royalty Fees21,574 13,206 54,446 33,622 
New Business Royalty Fees4,866 4,003 13,979 10,840 
Initial Franchise Fees3,056 1,680 7,943 4,570 
Other Franchise Revenues426 71 931 202 
Interest Income363 301 1,012 841 
Total Revenues$57,687 $41,681 $151,987 $111,082 
Timing of revenue recognition:
Transferred at a point in time$25,440 $20,032 $68,036 $54,188 
Transferred over time32,247 21,649 83,951 56,894 
Total Revenues$57,687 $41,681 $151,987 $111,082 




Contract Balances
The following table provides information about receivables, cost to obtain, and contract liabilities from contracts with customers (in thousands):
September 30, 2022December 31, 2021Increase/(decrease)
Cost to obtain franchise contracts(1)
$3,007 $1,973 $1,034 
Commissions and agency fees receivable, net(2)
11,271 12,056 (785)
Receivable from franchisees(2)
31,055 29,673 1,382 
Contract liabilities(2)(3)
50,759 48,608 2,151 
(1) Cost to obtain franchise contracts is included in Other assets on the condensed consolidated balance sheets.
(2) Includes both the current and long term portion of this balance.
(3) Initial Franchise Fees to be recognized over the life of the contract.


The Company records Franchise Fees as contract liabilities on the Condensed Consolidated Balance Sheets when the agreement is executed. Contract liabilities are reduced as fees are recognized in revenue over the expected life of the franchise license. As the term of the franchise license is typically ten years, substantially all of the franchise fee revenue recognized in the period ended September 30, 2022 was included in the contract liabilities balance as of December 31, 2021.
The weighted average remaining amortization period for contract liabilities related to open franchises is 7.9 years.

Significant changes in contract liabilities are as follows (in thousands):
Contract liabilities at December 31, 2021
$48,608 
Revenue recognized during the period(7,943)
New deferrals(1)
10,094 
Contract liabilities at September 30, 2022
$50,759 
(1) Initial Franchise Fees where the consideration is received from the franchisee for services which are to be transferred to the Franchisee over the expected life of the Franchise Agreement