Under what condition are Crave Cookies' contract assets transferred to receivables?

According to Crave Cookies' 2025 Franchise Disclosure Document, contract assets are transferred to receivables when the rights to consideration become unconditional. These contract assets primarily relate to Crave Cookies' rights to consideration for work completed but not yet billed at the reporting date. These assets consist of franchise commissions and supplies.

For a prospective Crave Cookies franchisee, this means that the franchisor recognizes revenue for work completed, even if they haven't yet billed for it. The amounts are recorded as contract assets until the right to receive payment becomes unconditional, at which point they are reclassified as accounts receivable. This is a standard accounting practice that aligns revenue recognition with the performance of services or delivery of goods.

This accounting treatment provides transparency into Crave Cookies' financial position by distinguishing between work in progress (contract assets) and amounts that are due and payable (accounts receivable). Franchisees should be aware of these accounting practices as they provide insight into how the franchisor manages and reports its financial performance. Understanding the timing of when assets are transferred to receivables can help franchisees better interpret the franchisor's financial statements.