How does Crepe De Licious consider franchise rights?

According to Crepe De Licious's 2025 Franchise Disclosure Document, franchise rights are considered symbolic intellectual property. For sales-based and usage-based services, Crepe De Licious recognizes revenue at the later of when the subsequent sale occurs, or on the satisfaction or partial satisfaction of the performance obligation to which the royalty relates. These sales-based and usage-based royalties are recognized as they are earned. Royalties are billed in the first week of each month, and franchisees have thirty days to pay.

This means that Crepe De Licious recognizes revenue from royalties based on actual sales or usage by the franchisee, aligning revenue recognition with the franchisee's activity and payment schedule. This approach is common in franchising, where royalty payments are tied to the franchisee's gross sales. By recognizing royalties as earned, Crepe De Licious ensures that its financial reporting reflects the ongoing performance of its franchise network.

For a prospective franchisee, this accounting practice indicates that Crepe De Licious's financial success is directly linked to the success of its franchisees. The royalty structure incentivizes Crepe De Licious to support its franchisees in generating sales, as its own revenue from royalties depends on it. The thirty-day payment term provides franchisees with a reasonable timeframe to manage their cash flow and remit royalty payments.