What are franchisees required to remit to Crave Cookies under the franchise agreement?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
As a franchisor, the Company's principal business is to sell franchises and continuing fees to provide managed assistance of those franchises. Franchise rights may be granted through a franchise agreement that sets out the terms of the arrangement with the franchisee. The franchise agreements require that the franchisee remit continuing royalty and marketing fees to the Company based on the monthly revenues of the franchisees. The franchise agreements also require certain, upfront franchise fees such as initial fees paid upon opening of a franchise. The Company recognizes revenue when performance obligations under the terms of contracts with its customers are satisfied, which occurs when pre-opening services are provided to a customer to enable them to direct the use and obtain the benefit of the franchise, with the remaining portion being recognized over the life of the contract.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to the 2025 Crave Cookies FDD, franchisees are required to make several payments to Crave Cookies. These payments include continuing royalty fees and marketing fees, which are based on a percentage of the franchisee's monthly revenues. Franchisees must also pay certain upfront franchise fees, such as initial fees, when opening their Crave Cookies location.
These fees are collected in exchange for the right to operate a Crave Cookies franchise and to receive managed assistance from the franchisor. Crave Cookies recognizes revenue when it has fulfilled its obligations under the franchise agreement. This typically occurs when pre-opening services are provided to the franchisee, enabling them to operate the franchise. The remaining portion of the revenue is recognized over the life of the franchise agreement.
For a prospective Crave Cookies franchisee, it is important to understand the structure and timing of these payments. Franchisees should carefully review the franchise agreement to fully understand how royalty and marketing fees are calculated, when initial fees are due, and what services are provided in exchange for these fees. This will help them accurately forecast their expenses and assess the profitability of the franchise opportunity.