What factors does Craters & Freighters continually evaluate regarding uncertain tax positions?

According to Craters & Freighters' 2025 Franchise Disclosure Document, the company continually assesses several factors related to uncertain tax positions. These include expiring statutes of limitations, ongoing audits, proposed settlements, changes in tax law, and authoritative rulings. This evaluation is part of Craters & Freighters' adoption of FASB ASC 740-10-25, Accounting for Uncertainty in Income Taxes. The company will record a liability for uncertain tax positions if it is more likely than not that a tax position would not be upheld if examined by a taxing authority.

Since Craters & Freighters is a pass-through entity, any changes resulting from an examination by the IRS or the Colorado Department of Revenue would not impact the entity level. However, the company's financial statements could be affected if uncertain tax positions were to arise. As of December 31, 2024 and 2023, Craters & Freighters' evaluation revealed no uncertain tax positions that would have a material impact on the financial statements. The tax years from 2020 through 2023 remain subject to examination by the IRS.

For a prospective franchisee, this means that Craters & Freighters actively monitors its tax positions and adjusts its financial reporting accordingly. While the company believes that no reasonably possible changes will occur within the next twelve months that will have a material impact on the financial statements, it is important to note that tax laws and rulings can change, potentially affecting the company's financial outlook. Franchisees should stay informed about these evaluations as part of their due diligence.