When does Crave Cookies recognize revenue related to product and equipment sales?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company also sells products and services to customers. Sales to customers typically include products or equipment. The Company's performance obligation under these sales is to deliver products or equipment to customers and revenue is recognized at that point. The timing and amount of revenue recognized related to these revenues was not impacted by the adoption of Topic 606.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, the company recognizes revenue from product and equipment sales when the goods are delivered to the customer. Crave Cookies' performance obligation is considered fulfilled at the point of delivery. This means that when Crave Cookies ships or hands over the products or equipment to the franchisee or customer, the revenue is recorded.
This revenue recognition policy is standard practice. Franchisors typically recognize revenue upon the transfer of goods or completion of services. For a prospective Crave Cookies franchisee, this indicates that the cost of any equipment or products purchased from the franchisor will be recorded as revenue for Crave Cookies at the time of delivery.
The FDD also mentions that the timing and amount of revenue recognized from product and equipment sales were not impacted by the adoption of Topic 606, which relates to revenue from contracts with customers. This suggests that Crave Cookies has consistently applied its revenue recognition policy even with changes in accounting standards.
It is important to note that this revenue recognition policy applies specifically to product and equipment sales. The FDD also details how Crave Cookies recognizes revenue from franchise fees and royalties, which follows a different approach, recognizing a portion upfront and the remainder over the life of the franchise agreement.