When does Crave Cookies recognize tax positions?

According to Crave Cookies' 2025 Franchise Disclosure Document, the company considers many factors when evaluating and estimating its tax positions and tax benefits. Crave Cookies recognizes tax positions only when it is more likely than not (with a likelihood of greater than 50%), based on technical merits, that the positions will be sustained upon examination.

In practical terms, this means that Crave Cookies takes a conservative approach to recognizing tax benefits. They only recognize a tax benefit if they believe it is more likely than not that the IRS will allow the benefit if they audit the company. This approach reduces the risk of the company having to pay penalties and interest if the IRS disallows a tax benefit.

Furthermore, the FDD states that Crave Cookies establishes reserves if it believes certain tax positions may be challenged and potentially disallowed. If facts and circumstances change, these reserves are adjusted through the provision for income taxes. The company also recognizes interest expense and penalties related to unrecognized tax benefits in the provision for income taxes.

For a prospective franchisee, this indicates that Crave Cookies is diligent in its tax practices and aims to comply with tax regulations. This can provide some assurance that the company's financial statements are reliable and that the company is not taking undue risks with its tax positions. However, it is important for potential franchisees to consult with their own tax advisors to understand the tax implications of investing in a Crave Cookies franchise.