When is revenue from volume rebates recognized by Crepe De Licious?
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 recognizes revenue from volume rebates at a specific point in time. This occurs when the rebates are earned from vendors based on purchases made by Crepe De Licious franchisees. These rebates are associated with the quantity of materials and supplies franchisees purchase under negotiated pricing levels.
Crepe De Licious acts as an agent for its franchisees by 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 rebate revenue from the vendors. The rebates are then received from the vendors on a quarterly basis.
This arrangement benefits Crepe De Licious franchisees by potentially lowering their supply costs through negotiated pricing. It also benefits Crepe De Licious, as they receive revenue from the vendors in the form of rebates. The FDD also states that Crepe De Licious does not have any significant financing components in its contracts with customers because payment is received shortly after the rebate is earned.