When does Crave Cookies recognize revenue from the sale of goods or services to customers?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
t bearing and due on demand. The related party is owned 100% by the owners of the Company.
Revenue recognition - 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
Limited Liability Company Tax Status - the Company, with the consent of its members, has elected under the Internal Revenue Code (IRC) to be taxed as a limited liability company. In lieu of income taxes, the members are taxed on the Company's taxable income. Therefore, no provision or liability for income taxes has been included in the financial statements.
The Company considers many factors when evaluating and estimating its tax positions and tax benefits.
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 goods or services is transferred to the customer, reflecting the consideration Crave Cookies expects to receive. The timing and amount can vary based on the nature of the goods/services and the terms of the customer contract.
For franchise fees, Crave Cookies recognizes a portion of the revenue when it has performed substantially all services stipulated in the franchise agreement. This typically happens upon completion of new franchise training and the commencement of the franchise's business operations. 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 and consequently recognizes deferred revenue until certain revenue recognition criteria have been met.
When Crave Cookies sells products or equipment directly to customers, revenue is recognized at the point of delivery. This policy applies specifically to product or equipment sales, and the adoption of Topic 606 did not impact the timing or amount of revenue recognized for these sales. In 2021, there were no product or services sold to customers.