For 7 Brew, are revenues from customers using gift cards included in Gross Sales?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
- i. "Gross Sales" means the aggregate revenue received from selling, or providing services with respect to, beverages, food, other menu items, and merchandise, whether for cash or on credit, less (a) applicable sales taxes collected and remitted to the appropriate tax authority, (b) valid coupon credits and employee discounts deducted from revenue initially recorded as Gross Sales in an amount equal to 2% of such Gross Sales, and (c) revenue derived from selling or issuing gift cards and loyalty cards (although revenue derived from selling products and services to customers using those cards for payment is included in Gross Sales), but without deducting any other costs or expenses whatsoever.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 61–73)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, gross sales include revenues from customers using gift cards. Specifically, while the initial revenue from selling or issuing gift cards is excluded from gross sales, any subsequent revenue derived when customers use these gift cards to purchase products or services at 7 Brew is included in gross sales.
For a prospective 7 Brew franchisee, this distinction is important for understanding how gross sales are calculated and reported. It means that the initial sale of a gift card does not count towards the location's gross sales figures, but when that gift card is redeemed for coffee, merchandise, or other items, the transaction is included in gross sales. This approach ensures that gross sales accurately reflect the value of goods and services provided to customers, regardless of the payment method.
This method of accounting for gift card revenue is fairly standard in the franchise industry. Franchisors typically exclude the initial sale of the gift card from gross sales to avoid double-counting revenue. By including the redemption value in gross sales, 7 Brew provides a more accurate representation of a store's financial performance based on actual sales to customers.