What does Craters & Freighters generally provide franchisees under the franchise agreements?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchise revenues consist primarily of royalties, advertising, technology and insurance fund contributions, and initial franchise fees. Under franchise agreements, the Company generally provides franchisees with (a) a franchise license, which includes a license to use the Company's intellectual property, advertising and promotion management, technology platforms, and insurance services, (b) pre-opening services, and (c) ongoing services. As a practical expedient (as defined in ASC 952-606-25-2 Revenue from Contracts with Customers, Recognition), the Company accounts for its pre-opening services as a distinct service from the franchise license and ongoing services in a franchise agreement. Pre-opening services include (a) assistance in the selection of a site, (b) assistance in obtaining facilities and preparing the facilities for their intended use, including related financing, architectural, and engineering services, and lease negotiations, (c) training of the franchisee's personnel or the franchisee, (d) preparation and distribution of manuals and similar material concerning operations, administration, and record keeping (e) bookkeeping, information technology, and advisory services, including setting up the franchisee's records and advising the franchisee about income, real estate, and other taxes or about regulations affecting the franchisee's business, and (f) inspection, testing, and other quality control programs. The Company records these pre-opening services fees as initial franchise fee revenue upon satisfaction of the performance obligation, typically when the franchisee begins operations.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, under the franchise agreements, Craters & Freighters generally provides franchisees with a few key elements. These include (a) a franchise license, which allows the franchisee to use Craters & Freighters' intellectual property, advertising and promotion management, technology platforms, and insurance services, (b) pre-opening services, and (c) ongoing services.
The pre-opening services that Craters & Freighters offers are quite comprehensive. They include assistance in selecting a site, help with obtaining facilities and preparing them for use, including financing, architectural, and engineering services, and lease negotiations. Craters & Freighters also provides training for the franchisee's personnel or the franchisee themselves. Furthermore, they prepare and distribute manuals and similar materials concerning operations, administration, and record keeping.
In addition to the above, Craters & Freighters offers bookkeeping, information technology, and advisory services. This includes setting up the franchisee's records and advising on income, real estate, and other taxes, as well as regulations affecting the franchisee's business. Finally, Craters & Freighters provides inspection, testing, and other quality control programs to ensure standards are met. Craters & Freighters recognizes revenue from these pre-opening services as initial franchise fee revenue once the franchisee begins operations.