Do the Crave Cookies financial statements include a breakdown of Crave Cookies' revenue by source?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
Note 1: Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Crave Cookies Franchising, LLC (the Company) formed on February 15, 2021 under the laws of the state of Utah as a Utah corporation.
The Company is a franchise company for Crave Cookies locations. The Company grants franchisees the right to operate a physical storefront location using the Crave Cookies name and marks.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Accounts Receivable
Accounts receivable are stated at the amount of consideration from customers of which the Company has an unconditional right to receive. The Company provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. As of December 31, 2022 and 2021, there was no allowance for doubtful accounts recorded.
Generally, the Company does not charge interest on past due accounts. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer. No bad debt expense was recorded in 2022 or 2021.
Inventories
Inventories consist of cookie boxes. Inventories are stated at the lower of cost or net realizable value. Costs of cookie boxes are determined using the first-in, first-out (FIFO) method.
Notes Receivable - Related Party
Notes receivable represent amounts due from a related party for operating expenses and other fees that the Company paid on behalf of the related party. The terms of the note are non-interest bearing and due on demand. The related party is owned 100% by the owners of the Company.
Prepaid Expenses
Prepaid expenses include prepayment for subscriptions and other prepaid expenses.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
Based on the 2025 Crave Cookies Franchise Disclosure Document, the provided excerpts from Item 21, which includes the financial statements and related notes, do not contain a breakdown of Crave Cookies' revenue by source. The notes to the financial statements discuss various accounting policies, such as accounts receivable, inventories, and prepaid expenses, and provide details about the audit reports. However, they do not specify the different sources of revenue for Crave Cookies.
Without a detailed breakdown of revenue sources, it is difficult for a prospective franchisee to understand how Crave Cookies generates its income. This information would typically include revenue from franchise fees, royalties, and any other services or products that Crave Cookies offers. Understanding the revenue mix is crucial for assessing the financial stability and potential growth areas of the franchisor.
A prospective Crave Cookies franchisee should request a detailed breakdown of revenue by source from the franchisor. This information is essential for conducting thorough due diligence and making an informed decision about investing in the franchise. Specifically, the franchisee should inquire about the percentage of revenue derived from initial franchise fees, ongoing royalties, and any other services or products sold to franchisees or other customers. This will allow the franchisee to better understand the franchisor's business model and assess the long-term sustainability of the franchise system.