When are initial franchise fees due for a Crepe De Licious franchise?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 FDD Document
- Franchise Fees For performance obligations related to franchise fees from franchisees, the Company has elected to adopt Financial Accounting Standards Board Accounting Standards Update 2021-02 which allows them to recognize the initial franchise fees in the year the store opens. The sales are made to franchisees. The Company receives a contractually obligated fee from the franchisee based on the restaurant. Payment for the initial franchise fees are due at the time the agreement is signed. Revenue from franchise fees are recognized at a point in time.
Source: Item 23 — RECEIPTS (FDD pages 57–233)
What This Means (2025 FDD)
According to the 2025 Crepe De Licious Franchise Disclosure Document, payment for the initial franchise fees is due at the time the franchise agreement is signed. Crepe De Licious recognizes revenue from these franchise fees when the store opens, aligning with Financial Accounting Standards Board Accounting Standards Update 2021-02. This accounting method allows Crepe De Licious to defer revenue recognition until the franchisee commences operations.
For a prospective Crepe De Licious franchisee, this means that the initial franchise fee must be paid upon signing the franchise agreement, which is a standard practice in the franchise industry. However, Crepe De Licious will not recognize this payment as revenue until the franchisee's store actually opens. This policy could provide some reassurance to franchisees, as it aligns the franchisor's revenue recognition with the franchisee's operational launch.
It is important for potential franchisees to understand the payment terms and revenue recognition policies, as these can impact the financial relationship between the franchisee and Crepe De Licious. Franchisees should ensure they have sufficient capital to cover the initial franchise fee at the time of signing, as well as the additional costs associated with opening and operating the franchise. Understanding these financial obligations is crucial for making an informed decision about investing in a Crepe De Licious franchise.