When is revenue from gift/loyalty/stored-value cards included in 7 Brew's Gross Sales?

According to 7 Brew's 2025 Franchise Disclosure Document, revenue from gift, loyalty, and stored-value cards is included in Gross Sales when the card or item is used to pay for products and services at the 7 Brew store. This means that the franchisee does not recognize the revenue when the card is initially sold. Instead, the revenue is recognized at the time the customer redeems the card for goods or services. This policy affects how a franchisee reports their sales and calculates royalties.

For a prospective 7 Brew franchisee, this revenue recognition policy has implications for financial planning and reporting. The franchisee must track the sale of gift cards separately from regular sales. The franchisee must also have a system to accurately record when these cards are redeemed so that the corresponding revenue can be included in Gross Sales for the relevant period. This ensures that royalty payments, which are based on Gross Sales, are calculated correctly.

It is also important to note that the franchisee's store may not issue or redeem any coupons or gift/loyalty/stored-value cards unless 7 Brew first approves their form and content, along with the proposed issuing and honoring/redemption procedures. 7 Brew retains the right to grant or withhold approval at its discretion. Furthermore, 7 Brew reserves the right to modify its policies and practices regarding revenue recognition, revenue reporting, and the inclusion or exclusion of certain revenue from "Gross Sales" as business practices and technology change. This means that the franchisee must stay informed of any changes to these policies to ensure compliance.