What is included in the definition of 'Net Sales' for a Carvel Shoppe?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
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- "Net Sales" includes all revenues generated by a Shoppe or conducted from or with respect to a Shoppe, whether the sales are evidenced by cash, check, credit, charge, account, barter or exchange, but does not include (a) the initial sales or reloading of gift cards, (b) discounts, (c) the sale of food or merchandise for which refunds have been made in good faith to customers, (d) the discounted portion of employee meals, (e) sales, meals, use or excise tax imposed by a governmental authority directly on sales and collected from customers, provided that the amount for the tax is added to the selling price or absorbed therein and is actually paid by you to a governmental authority, (f) the sale of equipment used in the operation of the Shoppe, or (g) tips. See Note 2 of Item 6 for a complete definition of "Net Sales."
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- These sales figures do not reflect the costs of sales, operating expenses or other costs or expenses that must be deducted from the Net Sales figures to obtain your net income or profit.
Source: Item 19 — Financial Performance Representations (FDD pages 91–93)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, "Net Sales" for a Carvel Shoppe encompasses all revenues generated by the Shoppe, regardless of the form of payment. This includes sales made via cash, check, credit, charge, account, barter, or exchange. This broad definition ensures that all income streams directly resulting from the Shoppe's operations are included in the calculation of gross revenue.
However, the definition of "Net Sales" also explicitly excludes several items. These exclusions include the initial sales or reloading of gift cards, any discounts offered, and refunds made in good faith to customers for food or merchandise. Additionally, the discounted portion of employee meals is not included in "Net Sales." Sales, meals, use, or excise taxes imposed by a governmental authority and collected from customers are also excluded, provided that the tax amount is added to the selling price or absorbed therein and is actually paid to the governmental authority. The sale of equipment used in the operation of the Shoppe and tips are also excluded from the calculation of "Net Sales".
Understanding what constitutes "Net Sales" is crucial for prospective Carvel franchisees because it directly impacts the financial performance representations provided in Item 19 of the FDD. These figures are used to project potential earnings and assess the viability of the franchise. By excluding certain items like taxes and refunds, the "Net Sales" figure provides a clearer picture of the revenue generated from the core business operations of the Carvel Shoppe. Franchisees should carefully review these inclusions and exclusions to accurately forecast their potential revenue and profitability.
It is important to note that these sales figures do not reflect the costs of sales, operating expenses, or other costs that must be deducted to determine net income or profit. Therefore, while "Net Sales" provides a measure of gross revenue, it is not indicative of the actual profit a franchisee can expect to earn.