What was the amount of initial franchise fees Crave Cookies collected in 2022?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
For the franchise fees, the Company has determined that the services they provide in exchange for upfront franchise fees, which primarily relate to pre-opening training and other services, are individually distinct from the ongoing services they provide to their franchisees. As a result, these pre-opening are recognized upon the franchise opening, and completion of the related training. The pre-opening fees that are recognized upon the franchise opening are generally approximately 80% of the initial franchise fee. The remaining portion of the upfront franchise fees are recognized as revenue over the expected life of the franchise agreement, which is generally 10 years. If a franchise location closes before this estimated 10-year life, the Company recognizes the remaining unearned revenue and deferred costs into income at the time the location closes. Revenues for these upfront franchise fees are recognized on a straight-line basis, which is consistent with the franchisee's right to use and benefit from the intellectual property. Franchise fees that are collected prior to the location opening are considered contract liabilities (also known as deferred revenue) and are recognized as income when the franchise location opens.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
Based on the 2025 Crave Cookies Franchise Disclosure Document, the franchisor recognizes revenue from franchise fees over time. The FDD states that upfront franchise fees primarily cover pre-opening training and other services, and these are considered distinct from ongoing services to franchisees. Approximately 80% of the initial franchise fee is recognized upon the franchise opening and completion of training. The remaining 20% is recognized as revenue over the expected 10-year life of the franchise agreement. If a franchise closes early, any unearned revenue and deferred costs are recognized as income at that time. Franchise fees collected before a location opens are considered deferred revenue and are recognized as income when the location opens. The document does not specify the total amount of initial franchise fees collected in 2022.
While the FDD explains the revenue recognition method for franchise fees, it does not provide the actual dollar amount of initial franchise fees collected by Crave Cookies in 2022. Instead, it focuses on how the fees are accounted for and when they are recognized as revenue.
To determine the total initial franchise fees collected in 2022, a prospective franchisee should review the complete audited financial statements or specifically ask the franchisor for this information during their due diligence. Understanding the total cash inflow from franchise fees can provide insights into the company's growth and financial stability.