What was the reported gift card liability for 7 Brew as of December 25, 2022?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
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Note 3: Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of the following:
| De | cember 29, 2024 | Dec | 2023 | De | cember 25, 2022 | |
|---|---|---|---|---|---|---|
| Accounts payable | $ | 570,127 | $ | 329,737 | $ | 48,050 |
| Accrued wages and benefits Gift cards liability | 533,148 6,514,150 | 310,119 2,894,549 | 966,130 922 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 82)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the company's gift card liability as of December 25, 2022, was $922,165. This figure represents the total value of unredeemed gift cards that 7 Brew franchisees had sold to customers. The liability is managed by 7 Brew, which collects all funds from the activation of gift cards and holds the unredeemed amounts as a liability on its balance sheets. This liability is categorized within Accounts payable and accrued expenses.
For a prospective franchisee, this indicates the scale of the gift card program and the associated financial obligations 7 Brew manages. The fact that 7 Brew manages the gift card program centrally could simplify operations for franchisees, as they do not have to handle the complexities of tracking and managing gift card liabilities themselves. Instead, 7 Brew takes on this responsibility, providing a potentially valuable service to its franchisees.
It's also important to note that 7 Brew's gift cards do not have expiration dates, and the company does not deduct non-usage fees from unredeemed cards. 7 Brew completed its initial breakage assessment as of December 29, 2024, and recognized breakage income of $1.5 million during the year ended December 29, 2024. No breakage revenue was previously recognized for the years ended December 31, 2023, or December 25, 2022. This means that 7 Brew did not recognize any revenue from unredeemed gift cards for the period in question.