How is lease expense generally recognized over the lease term for Crave Cookies?

According to Crave Cookies' 2025 Franchise Disclosure Document, lease expenses are generally recognized on a straight-line basis over the lease term. This means that the total lease expense is divided evenly over the entire period of the lease, regardless of when the payments are actually made. This accounting method provides a consistent expense amount each period, which can help in financial planning and analysis.

For a prospective Crave Cookies franchisee, this straight-line recognition of lease expenses simplifies budgeting and forecasting. The franchisee can expect a consistent lease expense each month or year, making it easier to predict overall operating costs. This is a common practice in franchise accounting, as it aligns the expense with the benefit received from using the leased asset over its life.

However, Crave Cookies has elected not to record leases with an initial term of 12 months or less on the balance sheets. For these short-term leases, the lease expense is still recognized on a straight-line basis over the lease term. This means that even if a franchisee enters into a very short-term lease, the expense will be spread evenly over that short period. This policy could impact the franchisee's short-term financial statements, particularly if there are significant upfront costs associated with the lease.