Revenue from Contracts with Customers

6 Months Ended

Jun. 25, 2022

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

The Company records contract assets for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year and if such costs are material. Commission expenses, a primary cost associated with the sale of franchise licenses, are amortized to selling, general and administrative expenses in the consolidated statements of operations ratably over the life of the associated franchise agreement.

Capitalized costs to obtain a contract were $11 million as of both June 25, 2022 and December 25, 2021, and are presented within deferred commissions on the consolidated balance sheets. The Company recognized an immaterial amount of costs during the three and six months ended June 25, 2022 and June 26, 2021 that were recorded as a contract asset at the beginning of the periods.

The Company had Deferred Revenue of $40 million and $38 million as of June 25, 2022 and December 25, 2021, respectively, which includes contract liabilities, consisting primarily of deferred franchise fees and deferred development fees, of $38 million and $27 million as of June 25, 2022 and December 25, 2021, respectively. The Company recorded less than $1 million of revenue during the three months ended June 25, 2022 and June 26, 2021, and $2 million and $1 million of revenue during the six months ended June 25, 2022 and June 26, 2021, respectively, that was recorded as a contract liability as of the beginning of the period.