What is the definition of 'Net Sales' for 7 Brew stores?

According to 7 Brew's 2025 Franchise Disclosure Document, Net Sales are defined as Gross Sales less discounts other than valid coupon credits and employee discounts. Gross Sales is the aggregate revenue from selling beverages, food, other menu items, and merchandise, whether for cash or credit. From this total, 7 Brew deducts applicable sales taxes remitted to tax authorities, valid coupon credits and employee discounts up to 2% of Gross Sales, and revenue from selling gift cards and loyalty cards. However, revenue from customers using gift or loyalty cards for payment is included in Gross Sales.

For a prospective 7 Brew franchisee, understanding the distinction between Gross Sales and Net Sales is crucial for financial planning and performance analysis. Gross Sales represents the total revenue before certain deductions, while Net Sales reflects the revenue after these deductions, providing a clearer picture of actual earnings from sales. Monitoring both metrics can help franchisees assess the effectiveness of promotional offers and manage discount strategies.

The FDD indicates that, for the 180 Measured Stores during Fiscal Year 2024, the average Net Sales margin was 97.18%, with a median of 97.23%. The highest Net Sales margin achieved by any Measured Store was 99.01%, while the lowest was 92.40%. These figures offer a benchmark for franchisees to evaluate their own store's performance against the broader 7 Brew system.

It's important to note that Net Sales, as defined by 7 Brew, excludes specific deductions like coupon credits and employee discounts capped at 2% of Gross Sales. Franchisees should be aware of these specific inclusions and exclusions when calculating and reporting their sales figures to ensure compliance with 7 Brew's financial reporting standards. This clear definition helps in maintaining consistency and accuracy in financial reporting across all franchise locations.