Were the timing and amount of revenue recognized by Crave Cookies impacted by the adoption of Topic 606?
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 adoption of Topic 606 did not significantly impact the timing and amount of revenue recognized for product and service sales. The document specifies that Crave Cookies' revenues are derived from franchise fees and royalties, service sales, and product sales.
The FDD outlines a five-step model that Crave Cookies uses to determine the amount of revenue recognized. This model includes identifying the contract, identifying performance obligations, determining the transaction price, allocating the transaction price, and recognizing revenue when performance obligations are met. For franchise sales, revenue recognition occurs when pre-opening services are provided, enabling the franchisee to operate, with the remaining portion recognized over the contract's life.
For product and service sales, revenue is recognized when products or equipment are delivered to customers. The FDD explicitly states that the adoption of Topic 606 did not impact the timing and amount of revenue recognized related to these revenues. This suggests that while the company adheres to specific accounting standards, the changes introduced by Topic 606 did not necessitate alterations in how Crave Cookies recognizes revenue from its product and service sales.