How does Cinnabon define 'Net Sales' for the purpose of calculating fees?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
Notes
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- "Net Sales" means all revenues generated by your Bakery or conducted from or with respect to the Bakery, 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 Bakery, 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 Bakery), 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.
The foregoing list is not intended to provide approval for such activities, which may be conducted only if approved.
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 Bakery (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).
Net Sales will 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 Bakery, or (g) tips.
Source: Item 6 — OTHER FEES (FDD pages 31–45)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, "Net Sales" encompasses all revenues generated by the bakery, regardless of the payment method (cash, check, credit, etc.). This includes sales of approved products and tangible property, as well as revenue from services performed at or related to the bakery. These services can be both off-premises (catering and delivery) and on-premises (games, gambling machines, or third-party advertising). The definition extends to any activities that utilize the Cinnabon system, trademarks, or products similar to approved products.
Furthermore, Cinnabon specifies that "Net Sales" includes all ancillary charges or fees, such as delivery fees and other service charges, whether paid directly by the customer or through third-party delivery services like Uber Eats or DoorDash. Even if these third-party services deduct commissions, fees, discounts, or coupons, these deductions are not subtracted from the franchisee's "Net Sales".
However, Cinnabon also outlines specific exclusions from "Net Sales". These exclusions include the initial sales or reloading of gift cards, discounts, refunds made in good faith to customers, the discounted portion of employee meals, sales, meals, use, or excise taxes collected from customers and remitted to governmental authorities, the sale of equipment used in the bakery's operation, and tips. These exclusions provide clarity for franchisees in calculating their royalty and advertising contributions, as these are based on a percentage of "Net Sales".