Revenue from Contract with Customers

12 Months Ended

Jan. 04, 2025

Disaggregation of Revenue [Abstract]

Revenue from Contract with Customers

13. Revenue from contracts with customers

Costs to obtain a contract

Costs to obtain a contract include commissions paid to area representatives associated with the sale of franchises within the area representative’s respective region. As of January 4, 2025 and January 6, 2024, $345 and $380 of commissions paid in connection with the sale of franchise licenses are capitalized within prepaid expenses and other current assets (short-term portion) and $1,086 and $1,431 are capitalized within other non-current assets (long-term portion), respectively. The commissions are amortized to expense over the expected life of the related franchise agreement. Commissions of $380, $410 and $425 were amortized to selling, general and administrative expenses during the years ended January 4, 2025, January 6, 2024 and December 31, 2022, respectively.

Contract liabilities

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 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		(2,289	)
Increase, excluding amounts recognized as revenue during the period		3,483
Balance at December 31, 2022		10,985
Revenue recognized that was included in the contract liability at the beginning of the year		(3,063	)
Increase, excluding amounts recognized as revenue during the period		3,954
Balance at January 6, 2024		11,876
Revenue recognized that was included in the contract liability at the beginning of the year		(5,044	)
Contract liability assumed by buyer of corporate-owned center		(187	)
Increase, excluding amounts recognized as revenue during the period		3,340
Balance at January 4, 2025	$	9,985

The weighted average remaining amortization period for deferred revenue is 3.1 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 January 4, 2025. The Company has elected to exclude short term contracts and any other variable consideration recognized on an “as invoiced” basis.

Contract liabilities to be recognized in:	Amount
2025	$	4,149
2026		1,135
2027		1,088
2028		1,048
2029		859
Thereafter		1,706
Total	$	9,985

The summary set forth below represents the balances in deferred revenue as of January 4, 2025 and January 6, 2024:

	January 4, 2025		January 6, 2024
Franchise fees	$	7,053	$	8,620
Service revenue		2,932		3,256
Total deferred revenue		9,985		11,876
Long-term portion of deferred revenue		5,836		6,615
Current portion of deferred revenue	$	4,149	$	5,261