What deductions are made 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, Gross Sales are calculated as the aggregate revenue from selling beverages, food, other menu items, and merchandise, whether for cash or credit. However, certain deductions are applied to arrive at the final Gross Sales figure.
The specific deductions that 7 Brew franchisees can make from their aggregate revenue to calculate Gross Sales include: (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, up to an amount equal to 2% of such Gross Sales, and (c) revenue derived from selling or issuing gift cards and loyalty cards. It is important to note that while the revenue from selling gift and loyalty cards is deducted, revenue from customers using these cards for payment is included in Gross Sales.
Notably, the 7 Brew definition explicitly states that no other costs or expenses whatsoever are deducted when calculating Gross Sales. This means that typical business expenses like rent, utilities, cost of goods sold, and labor are not subtracted from the aggregate revenue to determine Gross Sales. This is a fairly standard practice in the franchise industry, as Gross Sales is intended to represent the total revenue generated before accounting for operating expenses.