What deductions are allowed from revenue when calculating Gross Sales for a 7 Brew store?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
- i. "Gross Sales" means the aggregate revenue received from selling, or providing services with respect to, beverages, food, other menu items, and merchandise, whether for cash or on credit, less (a) applicable sales taxes collected and remitted to the appropriate tax authority, (b) valid coupon credits and employee discounts deducted from revenue initially recorded as Gross Sales in an amount equal to 2% of such Gross Sales, and (c) revenue derived from selling or issuing gift cards and loyalty cards (although revenue derived from selling products and services to customers using those cards for payment is included in Gross Sales), but without deducting any other costs or expenses whatsoever.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 61–73)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the brand defines "Gross Sales" as the aggregate revenue from selling beverages, food, merchandise, and services, whether paid in cash or credit. However, certain deductions are permitted when calculating Gross Sales.
Specifically, 7 Brew franchisees can deduct (a) applicable sales taxes collected and remitted to the appropriate tax authority, (b) valid coupon credits and employee discounts, up to 2% of Gross Sales, and (c) revenue derived from selling or issuing gift cards and loyalty cards. It is important to note that while the initial revenue from selling these cards is deducted, revenue from customers using these cards to purchase products and services is included in Gross Sales.
The 7 Brew FDD is very specific about what is included and excluded from the Gross Sales calculation. No other costs or expenses can be deducted from gross revenue to arrive at Gross Sales. This definition is important because many of the financial performance metrics presented in Item 19, such as Net Sales, Gross Profit, and EBITDAR, are calculated as a percentage of Gross Sales.