Do the Crave Cookies financial statements include any contingent liabilities?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to the 2025 Crave Cookies FDD, the financial statements do address contingent liabilities. Specifically, the notes to the financial statements explain that the preparation of these statements requires management to make estimates and assumptions that could affect the disclosure of contingent assets and liabilities. This means that Crave Cookies's financial reporting relies on management's judgment regarding potential future obligations or assets that are not yet certain.
For a prospective Crave Cookies franchisee, this disclosure highlights the importance of understanding the assumptions and estimates used in preparing the financial statements. While the FDD doesn't explicitly list any specific contingent liabilities, it acknowledges that such liabilities could exist and that their valuation is based on management's assessment. This is a standard accounting practice, but it introduces an element of uncertainty.
It would be prudent for a potential Crave Cookies franchisee to discuss with the franchisor the nature of any potential contingent liabilities that Crave Cookies Franchising, LLC, might face. Understanding these potential liabilities can provide a more comprehensive view of the company's financial health and potential risks. This is a common practice in financial accounting, where transparency about potential future obligations is essential for informed decision-making.