Is business interruption insurance proceeds included or excluded from the Gross Sales calculation for a 7 Brew franchise?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
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- "Gross Sales" means the aggregate amount of all revenue and other consideration generated from any source, including from selling products, services, and merchandise; other types of revenue you receive, including the proceeds of business interruption insurance; and (if we allow barter) the value of products, services, and merchandise bartered in exchange for the Store's products, services, or merchandise. However, Gross Sales exclude: (i) federal, state, or municipal sales, use, or service taxes collected from customers and paid to the appropriate taxing authority; (ii) proceeds from insurance, excluding business interruption insurance; and (iii) proceeds from any civil forfeiture, condemnation, or seizure by government entities.
In addition, Gross Sales are reduced by the value of employee discounts and promotional or marketing discounts offered to the public not exceeding, in the aggregate, 2% of the Store's weekly Gross Sales. Each charge or credit sale will be treated as a sale for the full price on the day the charge or sale is made, regardless of when you receive payment (whether full or partial, or at all) on that sale. Revenue from gift/loyalty/stored-value cards and similar items we approve for sale at 7 BREW Stores is included in Gross Sales when the card or other item is used to pay for products and services. Your Store may not issue or redeem any coupons or gift/loyalty/stored-value or similar cards unless we first approve in writing their form and content and your proposed issuing and honoring/redemption procedures. We have the right to grant or withhold our approval as we deem best.
We have the right to modify our policies and practices regarding revenue recognition, revenue reporting, and the inclusion or exclusion of certain revenue from "Gross Sales" as circumstances, business practices, and technology change.
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Source: Item 6 — OTHER FEES (FDD pages 16–23)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the calculation of Gross Sales for royalty purposes includes proceeds from business interruption insurance. Gross Sales is defined as the total revenue from all sources, including the sale of products, services, and merchandise, as well as any other revenue received, such as business interruption insurance proceeds. If 7 Brew allows bartering, the value of products, services, and merchandise bartered is also included in Gross Sales.
However, there are specific exclusions from the Gross Sales calculation. These exclusions include federal, state, or municipal sales, use, or service taxes collected from customers and paid to the appropriate taxing authority. Proceeds from general insurance (excluding business interruption insurance) and proceeds from any civil forfeiture, condemnation, or seizure by government entities are also excluded from Gross Sales.
In addition, the Gross Sales figure is reduced by the value of employee discounts and promotional or marketing discounts offered to the public, but these discounts cannot exceed 2% of the Store's weekly Gross Sales in aggregate. Revenue from gift, loyalty, and stored-value cards is included in Gross Sales when the cards are used to pay for products and services. 7 Brew retains the right to modify its policies regarding revenue recognition and the inclusion or exclusion of certain revenue from Gross Sales as business practices and technology change.