How does Crepe De Licious account for lease arrangements with parties under common control?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company has elected to apply the short-term lease exemption to all classes of underlying assets that qualify for the exemption. These leases consist of terms of twelve months or less and do not contain any options to purchase the underlying asset that the lessee is reasonably certain to exercise. In addition, the Company has elected the practical expedient to account for any lease arrangements with parties under common control based on the written terms and conditions of the lease.
Source: Item 23 — RECEIPTS (FDD pages 57–233)
What This Means (2025 FDD)
According to the 2025 Crepe De Licious Franchise Disclosure Document, the company has elected a practical approach for handling lease arrangements with parties under common control. Instead of complex calculations, Crepe De Licious bases the accounting on the written terms and conditions outlined in the lease agreement itself. This means that the financial impact of these leases is determined by what is actually stated in the lease document.
This approach simplifies the accounting process for leases with related parties. Rather than trying to determine fair market value or other potentially subjective measures, Crepe De Licious relies on the documented agreement. This can provide more transparency and predictability for franchisees, as the lease terms dictate the financial obligations.
For a prospective Crepe De Licious franchisee, this means that any lease agreement with a party under common control will be scrutinized based on its written terms. It is crucial to carefully review these terms and conditions to fully understand the financial implications of the lease. This includes understanding the rent amount, any additional fees, and the length of the lease term. Franchisees should seek legal and financial advice to ensure they fully understand the lease agreement before signing.