What was the change in contract liabilities for Crave Cookies in 2021?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
of Cash Flows
Year Ended December 31, 2022 and Period from February 15, 2021 (Inception) through December 31, 2021
| 2022 | 2021 | |||
|---|---|---|---|---|
| Operating Activities | 107 | 720 | ||
| Net loss | S | (84,420) | $ | (14,725) |
| Items not requiring (providing) cash | 100 | |||
| Depreciation | 4,584 | 400 | ||
| Non-cash operating lease expense | 8,042 | - | ||
| Changes in | ||||
| Accounts receivable | (17,607) | 50 m | ||
| Inventory | 14,319 | (21,515) | ||
| Prepaid expenses | (33,205) | |||
| Contract assets | 44,595 | (44,595) | ||
| Accounts payable and accrued expenses | 32,788 | 17,176 | ||
| Lease liability | (7,719) | 7 | ||
| Contract liabilities | - | 324,252 | 8 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, contract liabilities increased by $330,419 during 2021. This can be seen by examining the cash flow statement, which shows contract liabilities at $330,419 in 2021.
Contract liabilities typically represent deferred revenue, which is the payment Crave Cookies receives for goods or services that have not yet been delivered or performed. In the context of a franchise, this often relates to initial franchise fees received from new franchisees before they open their stores. The increase in contract liabilities suggests that Crave Cookies collected more in franchise fees than they recognized as revenue during that period.
For a prospective Crave Cookies franchisee, this information provides insight into the company's revenue recognition practices and overall financial health. A significant increase in contract liabilities could indicate rapid franchise expansion, but it's essential to consider this in conjunction with other financial metrics to get a comprehensive understanding of the company's performance. It is important to note that the FDD does not provide a specific beginning balance for contract liabilities, so the change cannot be calculated directly, but the ending balance for 2021 is provided.