What was the most significant impact of adopting Topic 842 on Crave Cookies' balance sheet?

According to Crave Cookies' 2025 Franchise Disclosure Document, the adoption of Topic 842 on January 1, 2022, had a notable impact on the company's balance sheet. The most significant change was the recognition of operating lease Right-of-Use (ROU) assets and operating lease liabilities, which amounted to $11,758. This accounting standard, which deals with leases, requires companies to recognize lease assets and liabilities on their balance sheets for most leases.

For a potential Crave Cookies franchisee, this means understanding that lease obligations for store locations and equipment will be clearly reflected on the franchisor's balance sheet. This provides a more transparent view of the company's financial commitments related to leases. The adoption of Topic 842 did not significantly affect Crave Cookies' statements of operations or cash flows, indicating that while the balance sheet was impacted, the company's profitability and cash management remained relatively stable.

It's important to note that Crave Cookies used the comparatives under ASC 840 transition method, meaning prior period amounts were not adjusted. Additionally, the company elected certain practical expedients, such as not reassessing lease classification or lease identification for existing leases and accounting for nonlease components as a single lease component. Short-term leases with an initial term of 12 months or less were also kept off the balance sheets. These elections simplify the implementation of the new standard for Crave Cookies.