What is the payment timing for Crepe De Licious's contracts with customers regarding rebates?
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 franchisees in negotiating pricing with large vendors and suppliers for food supplies on a system-wide basis. In return for these negotiation services, Crepe De Licious receives volume-based rebates from these vendors, which are tied to the quantity of franchisee purchases made under the negotiated pricing.
Crepe De Licious recognizes revenue from these rebates at the point in time 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.
For a prospective Crepe De Licious franchisee, this means that the cost of supplies may be reduced through the franchisor's negotiation efforts, and these savings are passed on to the franchisee. The rebates themselves are handled between Crepe De Licious and the vendors, with the company receiving payments quarterly. This arrangement suggests that franchisees may benefit from potentially lower supply costs due to the franchisor's ability to secure rebates based on the collective purchasing power of the franchise system.