How does Crepe De Licious receive consideration for price negotiation services?

According to Crepe De Licious's 2025 Franchise Disclosure Document, Crepe De Licious acts as an agent for its franchisees in negotiating prices with large vendors and approved suppliers for food supplies on a system-wide basis. In return for these price negotiation services, Crepe De Licious receives volume-based rebate revenue from these third-party vendors. These rebates are directly linked to the quantity of franchisee purchases of materials and supplies at the negotiated pricing levels.

This arrangement means that a portion of the cost savings Crepe De Licious negotiates with suppliers is returned to Crepe De Licious in the form of rebates. This provides an incentive for Crepe De Licious to secure the best possible pricing for its franchisees. The revenue from these rebates is recognized by Crepe De Licious at the point in time when the rebates are earned from the vendors, based on the purchases made by franchisees. The rebates are received quarterly.

For a prospective franchisee, this system implies that the cost of goods may be lower due to Crepe De Licious's negotiation efforts, but it also means that Crepe De Licious benefits directly from the volume of purchases made by franchisees. This creates a potential alignment of interests, where Crepe De Licious is motivated to support franchisee success in order to increase its own rebate revenue. Franchisees should ensure that the negotiated pricing and rebate structure provides them with competitive pricing compared to what they might achieve independently.

It's also worth noting that Crepe De Licious states it does not have any significant financing components in its contracts with customers, as payment is received shortly after the rebate is earned. This suggests that the rebate system is designed to be straightforward and timely, without involving complex financing arrangements.