For Carvel franchises, what sales are included in the definition of 'Net Sales'?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
"Net Sales" means all revenues generated by your Shoppe or conducted from or with respect to the Shoppe, whether the sales are evidenced by cash, check, credit, charge, account, barter or exchange.
Net Sales includes monies, gift card redemptions, or credit generated by or received from (i) the sale of Approved Products or tangible property of every kind and nature, promotional or otherwise, anywhere and (ii) services performed from, at, or in connection with the Shoppe, including (x) off-premises services (such as catering and delivery), (y) on-premises services (such as games, gambling machines, or third-party advertising within the Shoppe), or (z) any other services or activities that use either the System, the Marks, or products that are the same as or similar to the Approved Products.
Unless we specify otherwise in writing, Net Sales shall include all ancillary charges or fees, including delivery fees and other service charges, that are paid to you by a customer or by a third-party delivery or catering service (e.g., Uber Eats, Postmates, Grubhub, ezCater, or DoorDash) (a "TPS") in connection with delivery or catering services related to your Shoppe (recognizing that though the TPS may pay you an amount equal to the purchase price charged to the customer less a commission, other fees, and any discounts, credits, or coupons applied to that order, such commission, fees, discounts, credits, and coupons will not be deducted from your Net Sales).
Source: Item 6 — OTHER FEES (FDD pages 31–42)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, 'Net Sales' encompasses all revenue generated by the Shoppe or related to the Shoppe, regardless of whether the sales are transacted via cash, check, credit, charge, account, barter, or exchange. This broad definition ensures that all forms of income contribute to the royalty calculations and other financial obligations of the franchisee.
Specifically, Net Sales includes monies, gift card redemptions, or credit received from the sale of approved products or tangible property, promotional or otherwise, and services performed at or in connection with the Shoppe. This includes both off-premises services like catering and delivery, and on-premises services such as games, gambling machines, or third-party advertising within the Shoppe. The inclusion of these diverse revenue streams ensures that Carvel franchisees are contributing royalties on all aspects of their business operations.
Furthermore, Net Sales includes all ancillary charges or fees, including delivery fees and other service charges, paid by customers or third-party delivery services (TPS) like Uber Eats, Postmates, Grubhub, ezCater, or DoorDash. Even though a TPS may remit the purchase price to the franchisee after deducting commissions, fees, discounts, credits, or coupons, these deductions are not subtracted from the Net Sales calculation. This aspect is particularly important for franchisees utilizing third-party delivery services, as it clarifies that the gross sales figure before deductions is used for royalty calculations.