What accounting basis does Tectum Franchising LLC use for Cr3 American Exteriors?

According to the 2025 FDD, Tectum Franchising LLC, the franchisor of Cr3 American Exteriors, utilizes the accrual basis of accounting. This means that revenues are recognized when earned and expenses are recognized when incurred, regardless of when cash changes hands. The company's accounting period is the 12-month period ending on December 31 of each year.

For a prospective Cr3 American Exteriors franchisee, this information is relevant because it provides insight into how the franchisor manages its finances and reports its financial performance. Understanding the franchisor's accounting practices can help franchisees assess the financial stability and transparency of the company. The accrual method is generally considered a more accurate representation of a company's financial performance than the cash basis method, as it matches revenues with the expenses incurred to generate those revenues.

Furthermore, the FDD notes that the preparation of financial statements requires management to make estimates and assumptions that could affect the reported amounts of assets, liabilities, revenues, and expenses. While this is standard accounting practice, it's a reminder that financial statements are not absolute and are subject to interpretation. The FDD also mentions that the company had accounts receivables of $312,709 as of December 31, 2024, and all accounts are deemed collectible. This indicates the amounts due to the company based on executed franchise agreements for franchise sales, royalty fees, and other revenues.