What expenses are included in 'Total Operating Expense' for a 7 Brew franchise, and what expenses are specifically excluded?

According to 7 Brew's 2025 Franchise Disclosure Document, 'Total Operating Expense' for both franchised and company-owned stores includes a variety of costs associated with running the business. These expenses encompass equipment, supplies, cash-handling, credit-card processing fees, repairs, and general maintenance. Additionally, the 'Total Operating Expense' covers third-party commissions, delivery fees, other outside services, insurance coverage, and utility costs necessary for the store's operation.

However, the financial performance representation specifically excludes certain expenses from 'Total Operating Expense'. Royalties, which are a percentage of gross sales paid to 7 Brew, are not included in this category. Similarly, marketing expenses are excluded from 'Total Operating Expense'. These exclusions provide a clearer picture of the store-level operational costs, separate from franchise fees and marketing contributions.

For a prospective 7 Brew franchisee, understanding what is included and excluded from 'Total Operating Expense' is crucial for accurate financial planning. By knowing which expenses are factored into this category, franchisees can better estimate their operating costs and assess the overall profitability of their 7 Brew location. This information, combined with other financial performance metrics provided in the FDD, allows potential franchisees to make informed decisions about their investment.