What is the Company's performance obligation as agent for the franchisees of Crepe De Licious?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 FDD Document
e obligation is to procure food ingredients for the third-party. As consideration for this service, the Company receives a commission from the third-party upon delivery of the product. This commission is recognized at a point in time when the product is delivered to the customer.
- Sales & Usage Based Royalties Franchise rights are considered symbolic intellectual property. For sales-based and usage-based services, a franchisor recognizes revenue at the later of: (1) when the subsequent sales occurs; or (2) on the satisfaction or partial satisfaction of the performance obligation to which the royalty relates. Sales-based and usage-based royalties are recognized as earned. Royalties are billed for in the first week of each month and the franchisees have thirty days to pay.
Performance Obligations (Continued)
- Rebates As agent for the franchisees, the Company's performance obligation is to negotiate pricing with large vendors and approved suppliers of food supplies on a system-wide basis for the franchisees.
Source: Item 23 — RECEIPTS (FDD pages 57–233)
What This Means (2025 FDD)
According to the 2025 Crepe De Licious Franchise Disclosure Document, when acting as an agent for franchisees, the company has two performance obligations. First, Crepe De Licious negotiates pricing with large vendors and approved suppliers of food supplies on a system-wide basis for the franchisees. In return for these price negotiation services, Crepe De Licious receives volume-based rebates from these third-party vendors. The revenue from these rebates is recognized when the rebates are earned from the vendors based on purchases made by franchisees, and the rebates are received quarterly.
Second, as an agent for a third-party food distributor, Crepe De Licious's performance obligation is to procure food ingredients for the third-party. As consideration for this service, the Company receives a commission from the third-party upon delivery of the product. This commission is recognized at a point in time when the product is delivered to the customer.
For a prospective franchisee, this means that Crepe De Licious actively works to reduce costs by negotiating prices with suppliers and earns rebates based on the collective purchasing power of the franchise system. Additionally, Crepe De Licious facilitates the procurement of food ingredients from a third-party distributor, earning commissions upon delivery of these products. These arrangements could potentially lower the cost of goods for franchisees and streamline the supply chain.