When does Crave Cookies recognize revenue?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
Revenue is recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration that it expects to be entitled to in exchange for those goods or services. The amount and timing of revenue recognition varies based on the nature of the goods or services provided and the terms and conditions of the customer contract. A portion of the proceeds from the sale of franchises is recognized as revenue when the Company has performed substantially all services for the franchise as stipulated in the franchise agreement, generally at completion of new franchise training and the start of business by the franchise. The remaining portion is recognized as revenue over the expected life of the franchise agreement. The Company generally requires that the entire franchise fee be paid upon execution of the franchise agreement and consequently recognizes deferred revenue until certain revenue recognition criteria have been met.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies's 2025 Franchise Disclosure Document, revenue recognition occurs when control of promised goods or services is transferred to the company's customers. The amount recognized reflects the consideration Crave Cookies expects to receive in exchange for those goods or services. The timing and amount of revenue recognition are determined by the nature of the goods/services and the terms of the customer contract.
Specifically, a portion of the proceeds from franchise sales is recognized as revenue when Crave Cookies has performed substantially all the services stipulated in the franchise agreement. This typically happens upon completion of new franchisee training and the commencement of business operations by the franchisee. The remaining portion of the franchise fee is recognized over the expected life of the franchise agreement.
Crave Cookies generally requires the entire franchise fee to be paid upon the execution of the franchise agreement. Consequently, the company recognizes deferred revenue until specific revenue recognition criteria are met. This means that while Crave Cookies receives the franchise fee upfront, they do not immediately recognize all of it as revenue for accounting purposes. Instead, they spread the recognition of revenue over time as they fulfill their obligations to the franchisee.