For reporting purposes to Carvel, how is 'Gross Sales' defined?

According to Carvel's 2025 Franchise Disclosure Document, Gross Sales is defined specifically for reporting purposes to Carvel, and it is not used to calculate Royalty Fees and Advertising Contributions. For reporting purposes, Gross Sales means Net Sales, plus the amount of any discounts from redemptions of coupons, and other reductions made to calculate Net Sales.

This definition is important for Carvel franchisees because it clarifies how they should report their sales figures to the franchisor. It distinguishes between Gross Sales, which includes discounts and reductions, and Net Sales, which is the base figure used for calculating royalties and advertising fees. Franchisees must understand this distinction to ensure accurate reporting and avoid potential discrepancies.

Carvel franchisees are required to submit weekly reports detailing Gross Sales and Net Sales, along with monthly profit and loss statements. Maintaining accurate records of all revenues, including discounts and reductions, is crucial for compliance with Carvel's reporting standards. Failure to accurately report sales figures can lead to audits and potential penalties, as outlined in the Franchise Agreement.