What pre-opening services does Craters & Freighters provide to franchisees?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchise Revenues
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. During the years ended December 31, 2024 and 2023, the Company received initial franchise fee revenue of $88,255 an
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, Craters & Freighters provides franchisees with several pre-opening services. These services are considered distinct from the franchise license and ongoing support. These pre-opening services are a key component of the initial franchise package.
The pre-opening services that Craters & Freighters offers include assistance with site selection, helping franchisees obtain and prepare their facilities, including support with financing, architectural and engineering services, and lease negotiations. Craters & Freighters also provides training for the franchisee and their personnel.
In addition, Craters & Freighters assists with the preparation and distribution of operations manuals and other materials related to operations, administration, and record-keeping. They also offer bookkeeping, information technology, and advisory services to help franchisees set up their records and advise them on income, real estate, and other taxes, as well as regulations affecting their business. Finally, Craters & Freighters provides inspection, testing, and other quality control programs to ensure standards are met from the outset. Craters & Freighters recognizes revenue from these pre-opening services once the franchisee begins operations.