What was the value of Crave Cookies' contract liabilities at the end of 2022?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
lities, end of year | $ 1,279,141 | $ 654,671 |
Note 3. Operating Leases - ASC 842
Accounting Policies
The Company determines if an arrangement is a lease or contains a lease at inception. Leases result in the recognition of ROU assets and lease liabilities on the balance sheets. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease, measured on a discounted basis. The Company determines lease classification as operating or finance at the lease commencement date.
Crave Cookies Franchising, LLC Notes to Financial Statements December 31, 2023 and 2022
At lease commencement, the lease liability is measured at the present value of the lease payments over the lease term. The ROU asset equals the lease liability adjusted for any initial direct costs, prepaid or deferred rent, and lease incentives. The Company has made a policy election to use a risk-free rate (the rate of a zero-coupon U.S. Treasury instrument) for the initial and subsequent measurement of all lease liabilities. The risk-free rate is determined using a period comparable with the lease term.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
Based on the 2025 Crave Cookies Franchise Disclosure Document, the specific value of contract liabilities for Crave Cookies at the end of 2022 is not explicitly disclosed. However, the FDD does include information on operating leases and accounting policies that relate to liabilities.
Specifically, the document discusses the accounting policies for leases, stating that Crave Cookies recognizes Right-of-Use (ROU) assets and lease liabilities on their balance sheets for leases exceeding 12 months. These lease liabilities are measured at the present value of lease payments over the lease term. For shorter-term leases (12 months or less), Crave Cookies has elected not to record them on the balance sheets, recognizing the expense on a straight-line basis instead.
To determine the exact contract liabilities, a prospective franchisee should review the complete financial statements within the FDD, consult with a financial advisor, and ask Crave Cookies' franchisor for a detailed breakdown of their liabilities, including those related to leases and other contractual obligations. This will provide a clearer picture of the company's financial obligations at the end of 2022.