What is the principal business of Crave Cookies as a franchisor?
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 Franchise Disclosure Document, the company's primary business as a franchisor involves selling franchises and collecting ongoing fees to provide support to those franchises. Crave Cookies grants franchise rights through a franchise agreement, which outlines the terms and conditions for the franchisee. These agreements stipulate that franchisees must pay continuing royalty and marketing fees to Crave Cookies, calculated based on the franchisee's monthly revenues. Additionally, the agreements require franchisees to pay upfront franchise fees, such as initial fees when opening a franchise.
Crave Cookies recognizes revenue when it fulfills its obligations under the franchise agreements. This typically occurs when pre-opening services are provided to the franchisee, enabling them to operate and benefit from the franchise. The remaining portion of the revenue is recognized over the duration of the franchise contract. In addition to franchise-related revenue, Crave Cookies also generates revenue from product and service sales to customers, primarily through the delivery of products or equipment.
For a prospective franchisee, this means that a significant portion of their ongoing expenses will be royalty and marketing fees remitted to Crave Cookies, based on their monthly revenue. The initial franchise fee and other upfront costs are also important considerations. Understanding the terms of the franchise agreement, including the revenue recognition process, is crucial for managing their business effectively. The FDD indicates that Crave Cookies also generates revenue from product and service sales to customers, which may represent an additional revenue stream for franchisees, although the details of these sales are not elaborated upon in this section.