How is revenue measured by Crave Cookies?

According to Crave Cookies's 2025 Franchise Disclosure Document, accounts receivable, which factor into revenue, are stated at the amount of consideration from customers for which Crave Cookies has an unconditional right to receive. The company provides an allowance for credit losses based on a review of outstanding receivables, historical collection information, and existing economic conditions. As of December 31, 2023 and 2022, there was no allowance for credit losses recorded. This means that Crave Cookies recognizes revenue based on the amounts owed by customers, with a system in place to account for potential losses due to uncollectible accounts.

Crave Cookies generally does not charge interest on past due accounts. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer. During the years ended December 31, 2023 and 2022, credit loss expense related to doubtful accounts receivable, where collectability is not reasonably assured, was $5,000 and $0, respectively. This indicates that Crave Cookies assesses the creditworthiness of its customers and writes off uncollectible amounts, with a relatively small amount written off in 2023.

For a prospective franchisee, this accounting policy means that revenue recognition is tied to the consideration Crave Cookies is entitled to receive from its customers. The franchisee should be aware of the policies regarding credit evaluations, write-offs of delinquent accounts, and the potential for credit losses, even though these have been minimal in the past. Understanding these accounting practices can help a franchisee better manage their own financial expectations and operations.