For 7 Brew, are revenues from selling 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 do not include revenue derived from selling or issuing gift cards and loyalty cards. However, gross sales do include revenue derived from products and services when customers redeem those gift cards or loyalty cards for payment.
For a prospective 7 Brew franchisee, this means that the initial sale of a gift card is not counted towards gross sales. Gross sales is the aggregate revenue received from selling beverages, food, other menu items, and merchandise. This figure is important because many of the financial performance metrics disclosed in Item 19, such as net sales, gross profit, and EBITDAR, are calculated as a percentage of gross sales.
This distinction is important for franchisees to understand when forecasting revenue and managing their business. While the initial sale of a gift card doesn't immediately contribute to gross sales, the subsequent redemption of that card does. Franchisees should focus on strategies that encourage gift card redemption, as this will ultimately drive revenue and contribute to the gross sales figure used to calculate other key performance indicators.