Revenue from Contract with Customers

6 Months Ended

Jun. 25, 2022

European Wax Center, Inc. and Subsidiaries

Revenue from Contract with Customers

11. Revenue from contracts with customers

Contract liabilities consist of deferred revenue resulting from franchise fees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement. Also included are service revenues from corporate-owned centers, including customer prepayments in connection with the Wax Pass program. Contract liabilities are classified as deferred revenue on the condensed consolidated balance sheets.

Deferred franchise fees are reduced as fees are recognized in revenue over the term of the franchise license for the respective center. Deferred service revenues are recognized over time as the services are performed. The following table reflects the change in contract liabilities for the periods indicated:

	Contract liabilities
Balance at December 25, 2021	$	9,791
Revenue recognized that was included in the contract liability at the beginning    of the year		(1,400	)
Increase, excluding amounts recognized as revenue during the period		1,821
Balance at June 25, 2022	$	10,212

The weighted average remaining amortization period for deferred revenue is 3.8 years.

The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of June 25, 2022. The Company has elected to exclude short term contracts, sales-based royalties and any other variable consideration recognized on an “as invoiced” basis.

Contract liabilities to be recognized in:	Amount
2022 (from June 26, 2022)	$	3,200
2023		1,153
2024		1,090
2025		1,019
2026		909
Thereafter		2,841
Total	$	10,212

The summary set forth below represents the balances in deferred revenue as of June 25, 2022 and December 25, 2021:

	June 25, 2022		December 25, 2021
Franchise fees	$	7,842	$	7,911
Service revenue		2,370		1,880
Total deferred revenue		10,212		9,791
Long-term portion of deferred revenue		6,429		6,787
Current portion of deferred revenue	$	3,783	$	3,004