What is the Company's performance obligation regarding rebates for Crepe De Licious franchisees?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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. As consideration for the price negotiation services provided, the Company receives volume-based rebate revenue from these third-party vendors. These volume rebates are associated with the quantity of franchisee purchases of materials and supplies under the negotiated pricing levels. Revenue from these rebates is recognized at a point in time as the rebates are earned from the vendors based on purchases made by franchisees. The rebates are received from the vendors quarterly. The Company does not have any significant financing components in its contracts with customers as payment is received shortly after the rebate is earned.
Source: Item 23 — RECEIPTS (FDD pages 57–233)
What This Means (2025 FDD)
According to Crepe De Licious's 2025 Franchise Disclosure Document, the company acts as an agent for its franchisees in negotiating pricing with large vendors and approved suppliers of food supplies on a system-wide basis. As consideration for these price negotiation services, Crepe De Licious receives volume-based rebates from these third-party vendors. These rebates are directly linked to the quantity of materials and supplies franchisees purchase under the negotiated pricing agreements.
Crepe De Licious recognizes revenue from these rebates at a specific point in time, which occurs when the rebates are earned from the vendors based on the purchases made by franchisees. The rebates are received from the vendors on a quarterly basis. The company's contracts with customers do not have any significant financing components, as payment is received shortly after the rebate is earned.
For a prospective Crepe De Licious franchisee, this means that the franchisor is responsible for negotiating favorable pricing on food supplies, which can potentially lower the cost of goods sold. The franchisee benefits from these negotiated rates, and the franchisor is compensated through volume-based rebates from the vendors. The rebates are earned as franchisees make purchases, and Crepe De Licious receives these rebates quarterly.