What specific services are included in the pre-opening services provided by Craters & Freighters?
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, pre-opening services include several forms of assistance to help franchisees establish their business. These services are considered distinct from the franchise license and ongoing support.
Specifically, Craters & Freighters offers assistance in site selection, obtaining and preparing facilities (including financing, architectural, engineering services, and lease negotiations), and training the franchisee and their personnel. They also provide preparation and distribution of operations manuals, administration guidelines, and record-keeping materials.
Furthermore, Craters & Freighters includes bookkeeping, IT, and advisory services to aid in setting up records and advising on income, real estate, taxes, and relevant regulations. Finally, they offer inspection, testing, and other quality control programs as part of their pre-opening support. Craters & Freighters recognizes the fees from these pre-opening services as initial franchise fee revenue once the franchisee commences operations.