What is the classification of the notes receivable from a related party for Crave?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
ined whether any tax positions have met the recognition threshold and has measured the Company's exposure to those tax positions, noting none at the Company level.
3. Related party transactions
The Company has notes receivable from a related party with common ownership. These notes are noninterest bearing
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, notes receivable from a related party with common ownership are classified as "Notes Receivable – Related Parties." These notes are noninterest bearing and are due on demand. As of December 31, 2024, 2023, and 2022, the amount receivable was $320,387 for each year.
For a prospective franchisee, this indicates that Crave has financial dealings with related parties. The fact that these notes are classified specifically as "Notes Receivable – Related Parties" suggests transparency in their accounting practices. The notes being non-interest bearing and due on demand could imply flexibility in repayment terms between Crave and the related party.
The consistent receivable amount of $320,387 over three years might suggest a stable, ongoing financial arrangement. However, franchisees should be aware of related-party transactions, as they can sometimes present conflicts of interest or affect the company's financial stability. It is advisable to inquire about the nature of these related-party transactions and their potential impact on the franchise system.
Prospective franchisees should consider discussing these related-party transactions with Crave's management to fully understand the implications. Understanding the nature and purpose of these transactions can provide a clearer picture of the company's financial health and risk profile.