What is included in the 'Total Labor Expense' calculation for 7 Brew stores?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
Gross Profit means Net Sales less Costs of Goods Sold.
- v. "Total Labor Expense" is defined as actual Store-level payroll, including the Store's general manager and benefits, payroll taxes, and bonus expense.
It does not include any area manager salary or incentives.
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 "Total Labor Expense" is defined as the actual payroll at the store level. This includes the store's general manager's salary, benefits, payroll taxes, and any bonus expenses.
For a prospective 7 Brew franchisee, understanding what is included in the "Total Labor Expense" is crucial for accurate financial planning. By knowing that expenses such as the general manager's salary, benefits, payroll taxes, and bonuses are included, franchisees can better estimate their operating costs and project profitability. This also allows franchisees to compare their labor costs against the averages and medians reported in the FDD to gauge their operational efficiency.
It is important to note that the "Total Labor Expense" does not include any area manager salary or incentives. This distinction is important because franchisees should not include these costs when calculating their store-level labor expenses. The FDD also provides data on the percentage of stores exceeding the average Total Labor Expense margin, which can be a useful benchmark for franchisees to assess their own performance.