Can a Burneys Sweets More franchisee offset royalties when redeeming gift cards?
Burneys_Sweets_More Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall sell or otherwise issue gift cards or certificates (together "Gift Cards") that have been prepared utilizing the standard form of Gift Card provided or designated by Franchisor and only in the manner specified by Franchisor in the Brand Standards Manual or otherwise in writing. Franchisee shall fully honor all Gift Cards that are in the form provided or approved by Franchisor regardless of whether a Gift Card was issued by Franchisor via its website, Franchisee or another franchisee. Franchisee shall sell, issue, and redeem (without any offset against any Royalties) Gift Cards in accordance with procedures and policies specified by Franchisor in the Brand Standards Manual or otherwise in writing, including those relating to procedures by which Franchisee shall request reimbursement for Gift Cards issued by other franchisees and for making timely payment to Franchisor, other operators of franchises, or a thirdparty service provider for Gift Cards issued by Franchisee that are honored by Franchisor or other franchisees.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Burneys Sweets More's 2025 Franchise Disclosure Document, franchisees are explicitly prohibited from offsetting royalty payments with gift card redemptions. The FDD states that franchisees must redeem gift cards without any offset against royalties. This means that the full amount of royalties owed must be paid, regardless of the value of gift cards redeemed at the franchise location.
This policy ensures that Burneys Sweets More receives its full royalty fees, which are typically a percentage of gross sales. By preventing franchisees from reducing royalty payments through gift card redemptions, Burneys Sweets More maintains a consistent revenue stream. This is a standard practice in franchising, as franchisors rely on royalty payments to fund ongoing support, marketing, and brand development.
For a prospective Burneys Sweets More franchisee, this means they need to budget for royalty payments separately from gift card liabilities. They cannot use the value of redeemed gift cards to reduce the amount of royalties they owe to Burneys Sweets More. Franchisees must also follow Burneys Sweets More's procedures for requesting reimbursement for gift cards issued by other franchisees and for making timely payments for gift cards they issued that are honored elsewhere.