Royalty and advertising accrual review
Reviewing the store-level royalty and advertising accrual, exception rates, and the new-store trap that produces a silently missing accrual.
Calculated by store, based on store-level sales and each store's applicable royalty and advertising percentage.
Source: Rackson_RRS_RCY_Review_Process.docx sections 22 and 27.6.
Rates vary by store
Most locations run at the standard rate, but:
- A handful of legacy locations run at a different percentage — for example some at roughly half a percent above or below the standard rate.
- There have historically been additional quarterly advertising initiatives layered on top for some locations.
| Concept | Royalty | Advertising |
|---|---|---|
| RRS (Burger King) | 5% of net sales (acct 22400) | 4% of net sales (acct 22600) |
| RCY (Dave's Hot Chicken) | 5% of net sales (acct 22400) | 3% of net sales (acct 22600) |
The new-store trap
Watch specifically for new stores opening mid-period. They must be added into the sales/royalty worksheet, or their royalty and advertising accrual will simply be missing rather than flagged as an error.
Nothing in the workbook detects an absent store — this is why the check is a manual completeness step rather than a variance review.
Step-by-step checklist
On the sales/royalty worksheet — including any new stores that opened mid-period.
Including any legacy or exception rates.
For reasonableness.
Any swing not explained by a known rate difference or a new/closed location should be raised with the client.
RCY (Dave's) — the same structure
Similar schedule structure to RRS: calculated by store based on sales and each store's applicable percentage.
Three or four DHC stores run at a different percentage than the standard rate — for example some at roughly half a percent higher. Additional quarterly advertising initiatives have historically been layered on for some locations, though these have become less frequent recently.
On the close checklist, the Royalty / Advertising Accrual is a WD2 task, alongside posting sales in Intacct and the Coke/RSI rebate accrual.
Related
- RRS taxes and royalties workpapers — the 22400/22600 preparer steps and the BKC invoice matching
- RCY sales and revenue workpapers — the RCY accrual, including the 3% advertising rate
- Troubleshooting — "a new store's numbers look wrong"