How are changes in the amount of sales volume treated for Crepe De Licious' leases?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 FDD Document
ol. The amount due from the related party is $12,000 and $-0- at December 31, 2024 and December 31, 2023, respectively.
The Company has an amount due from its sole shareholder. This amount does not have a stated interest rate, is unsecured and has no set repayment terms. The amount receivable from the shareholder at December 31, 2024 and December 31, 2023 was $37,405 and $59,831, respectively.
5. Leases
The Company leases retail space and two vehicles under operating lease arrangements through 2028, 2026 an
Source: Item 23 — RECEIPTS (FDD pages 57–233)
What This Means (2025 FDD)
According to Crepe De Licious's 2025 Franchise Disclosure Document, changes in sales volume affect lease payments but do not trigger a reevaluation of lease liabilities. Specifically, Crepe De Licious's retail space lease agreement includes variable lease payments calculated as eight percent of retail sales exceeding $824,000.
This variable lease payment is made monthly once the minimum gross sales amount is reached. However, these changes in sales volume are treated as variable lease payments. This means that the Right-of-Use (ROU) asset and lease liability are not remeasured due to fluctuations in sales.
For a Crepe De Licious franchisee, this implies that while higher sales will increase lease payments due to the percentage-based variable component, the underlying lease agreement and liabilities remain stable. This can provide some predictability in financial planning, as the core lease terms are not subject to change based on sales performance. Franchisees should carefully consider the potential impact of variable lease payments on their overall profitability, especially when projecting revenue and expenses.