XML 18 R9.htm IDEA: XBRL DOCUMENT
v3.23.1

REVENUE RECOGNITION | 9 Months Ended
--- | ---
Mar. 31, 2023
Revenue from Contract with Customer [Abstract] |
REVENUE RECOGNITION | REVENUE RECOGNITION: Revenue Recognition and Deferred Revenue: Revenue recognized over time Royalty and advertising fund revenues represent sales-based royalties that are recognized in the period in which the sales occur. Generally, royalty and advertising fund revenues are billed and collected monthly in arrears. Advertising fund revenues and expenditures, which must be spent on marketing and related activities per the franchise agreements, are recorded on a gross basis within the unaudited Condensed Consolidated Statement of Operations. The treatment increases both the gross amount of reported revenue and expense and generally has no impact on operating income and net income. Franchise fees are billed and received upon the signing of the franchise agreement. Recognition of these fees is deferred until the salon opens and is then recognized over the term of the franchise agreement, which is typically 10 years. Franchise rental income is a result of the Company signing leases on behalf of franchisees and entering into sublease arrangements with the franchisees. The Company recognizes franchise rental income and expense when it is due to the landlord. Revenue recognized at point of sale Company-owned salon revenues are recognized at the time when the services are provided or the guest receives and pays for the merchandise. Revenues from purchases made with gift cards are also recorded when the guest takes possession of the merchandise or services are provided. Gift cards issued by the Company are recorded as a liability (deferred revenue) upon sale and recognized as revenue upon redemption by the guest. Gift card breakage, the amount of gift cards which will not be redeemed, is recognized proportional to redemptions using estimates based on historical redemption patterns. Product sales to franchisees and other partners are recorded at the time product is delivered. Information about receivables, broker fees and deferred revenue subject to the current revenue recognition guidance is as follows:
|  | March 31, 2023 |  | June 30, 2022 |  | Balance Sheet Classification
|  | (Dollars in thousands) |  |
Receivables from contracts with customers, net |  | $ | 10,107 |  |  | $ | 10,263 |  |  | Receivables, net
Broker fees |  | 13,218 |  |  | 15,592 |  |  | Other assets
Deferred revenue: |  |  |  |  |  |
Current |  |  |  |  |  |
Gift card liability |  | $ | 1,865 |  |  | $ | 2,037 |  |  | Accrued expenses
Deferred franchise fees open salons |  | 5,446 |  |  | 5,770 |  |  | Accrued expenses
Total current deferred revenue |  | $ | 7,311 |  |  | $ | 7,807 |  |  |
Non-current |  |  |  |  |  |
Deferred franchise fees unopened salons |  | $ | 2,563 |  |  | $ | 3,211 |  |  | Other non-current liabilities
Deferred franchise fees open salons |  | 22,518 |  |  | 26,827 |  |  | Other non-current liabilities
Total non-current deferred revenue |  | $ | 25,081 |  |  | $ | 30,038 |  |  |
Receivables relate primarily to payments due for royalties, advertising fees, rent, product sales and sales of salon services and product paid by credit card. The receivables balance is presented net of an allowance for expected losses (i.e., doubtful accounts), primarily related to receivables from franchisees. The following table is a rollforward of the allowance for doubtful accounts for the periods indicated:
|  | Nine Months Ended March 31,
|  | 2023 |  | 2022
|  | (Dollars in thousands)
Balance at beginning of period |  | $ | 6,559 |  |  | $ | 7,774 |
Provision for doubtful accounts |  | 545 |  |  | (88) |
Provision for franchisee rent (1) |  | 15 |  |  | 847 |
Reclass of accrued rent (2) |  | 74 |  |  | 396 |
Write-offs |  | (1,632) |  |  | (1,600) |
Balance at end of period |  | $ | 5,561 |  |  | $ | 7,329 |
_______________________________________________________________________________ (1)The provision for franchisee rent is recognized as rent in the unaudited Condensed Consolidated Statement of Operations. (2)The reclass of accrued rent represents franchisee rent obligations guaranteed by the Company that were unbilled and deemed unrecoverable as of June 30, 2021. The amounts billed in fiscal years 2023 and 2022 and the related accrual were reclassified to allowance for doubtful accounts. Broker fees are the costs associated with using external brokers to identify new franchisees. These fees are paid upon the signing of the franchise agreement and recognized as general and administrative expense over the term of the franchise agreement. The following table is a rollforward of the broker fee balance for the periods indicated:
|  | Nine Months Ended March 31,
|  | 2023 |  | 2022
|  | (Dollars in thousands)
Balance at beginning of period |  | $ | 15,592 |  |  | $ | 19,254 |
Additions |  | — |  |  | 25 |
Amortization |  | (2,374) |  |  | (2,398) |
Write-offs |  | — |  |  | (366) |
Balance at end of period |  | $ | 13,218 |  |  | $ | 16,515 |
Deferred franchise fees related to open salons are generally recognized on a straight-line basis over the term of the franchise agreement. Franchise fee revenue for the three months ended March 31, 2023 and 2022 was $1.6 and $1.6 million, respectively, and for the nine months ended March 31, 2023 and 2022 was $4.8 and $4.9 million, respectively. Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as of March 31, 2023 is as follows (dollars in thousands):
Remainder of 2023 |  | $ | 1,362 |
2024 |  | 5,390 |
2025 |  | 5,002 |
2026 |  | 4,536 |
2027 |  | 4,073 |
Thereafter |  | 7,601 |
Total |  | $ | 27,964 |

X
- References No definition available. + Details
Name: | us-gaap_RevenueFromContractWithCustomerAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI https://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 + Details
Name: | us-gaap_RevenueFromContractWithCustomerTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration