How are revenues for advertising services presented in Crepe De Licious' financial statements?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 FDD Document
Advertising Fees The Company maintains and administers an advertising fund (the "Advertising Fund"). The advertising contributions may be commingled in the general funds, but administratively segregated to form the Advertising Fund. All franchisees must contribute to the fund at the same rate of 3 percent of their respective gross revenues. The Advertising Fund may be used by the Company, in its sole discretion, to meet any and all costs of advertising for the franchise's concept as a whole. The Company has determined the advertising services provided to franchisees are highly interrelated with the franchise right and therefore not distinct. As a result, revenues for advertising services are recognized when the related revenue occurs. Revenues for these services are typically billed in the first week of the month and paid within thirty days. These revenues are presented as franchise contributions for advertising and other services. Expenses incurred to provide these services are presented as Franchise advertising expense and other services.
Source: Item 23 — RECEIPTS (FDD pages 57–233)
What This Means (2025 FDD)
According to the 2025 Crepe De Licious FDD, advertising fees are handled through an advertising fund. All Crepe De Licious franchisees must contribute 3% of their gross revenues to this fund. Although the advertising contributions may be mixed with general funds, they are administratively kept separate to form the Advertising Fund.
Crepe De Licious considers the advertising services provided to franchisees as highly interrelated with the franchise right and, therefore, not distinct. As a result, the revenues from advertising services are recognized when the related revenue occurs. These revenues are typically billed in the first week of the month and are due within thirty days.
In Crepe De Licious' financial statements, these revenues are presented as franchise contributions for advertising and other services. The expenses incurred to provide these advertising services are presented as franchise advertising expense and other services. This means that both the income from advertising fees and the expenses for advertising are specifically identified within the financial statements, giving a clear picture of how advertising funds are managed and spent.