When does Crepe De Licious recognize revenue for sales-based and usage-based royalties?

According to Crepe De Licious's 2025 Franchise Disclosure Document, the franchise rights are considered symbolic intellectual property. For sales-based and usage-based services, Crepe De Licious recognizes revenue at the later of two occurrences: (1) when the subsequent sales occur; or (2) on the satisfaction or partial satisfaction of the performance obligation to which the royalty relates. This means that Crepe De Licious does not recognize royalty revenue until the franchisee actually makes a sale or fulfills the service tied to the royalty.

Crepe De Licious recognizes sales-based and usage-based royalties as they are earned. Royalties are invoiced during the first week of each month, and franchisees are given thirty days to remit payment. This indicates that while the revenue recognition is tied to the actual sales or service delivery, the billing and payment cycle operates on a monthly basis.

For a prospective Crepe De Licious franchisee, this revenue recognition policy means that the royalty obligations are directly linked to their sales performance. Franchisees should be aware of the monthly billing cycle and ensure timely payment of royalties to avoid any potential late fees or penalties. Understanding this revenue recognition policy is crucial for managing their cash flow and financial planning.