When does Crepe De Licious recognize revenue from volume rebates?

According to the 2025 Crepe De Licious FDD, the company recognizes revenue from volume rebates at a specific point in time. This occurs when the rebates are earned from the vendors, which is directly tied to the purchases made by franchisees. Crepe De Licious acts as an agent for its franchisees, negotiating pricing with large vendors and approved suppliers for food supplies on a system-wide basis. As compensation for these price negotiation services, Crepe De Licious receives volume-based rebates from these vendors. These rebates are directly linked to the quantity of materials and supplies franchisees purchase under the negotiated pricing agreements.

For a prospective Crepe De Licious franchisee, this means that the franchisor's revenue from rebates is dependent on the franchisee's purchasing activity. The more a franchisee purchases from approved vendors, the more rebates Crepe De Licious earns. However, the rebates themselves are received quarterly from the vendors. This arrangement incentivizes Crepe De Licious to negotiate favorable pricing and terms with suppliers, as their compensation is directly tied to the purchasing volume of the franchisees.

It's important to note that Crepe De Licious does not have any significant financing components in its contracts with customers, as payment is received shortly after the rebate is earned. This suggests a relatively quick turnaround between franchisee purchases, vendor rebates, and revenue recognition for Crepe De Licious. This revenue recognition model is fairly common in franchise systems where the franchisor leverages the collective buying power of its franchisees to negotiate better deals with suppliers.