Does the definition of Net Sales for Cinnabon include revenue from gambling machines within the Franchised Business?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
C. Net Sales. "Net Sales" means all revenues generated by your Franchised Business or conducted from or with respect to the Franchised Business, 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 Franchised Business, including (x) offpremises services (such as catering and delivery), (y) on-premises services (such as games, gambling machines, or third-party advertising within the Franchised Business), 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,
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, Net Sales include revenues from gambling machines within the Franchised Business. The FDD defines "Net Sales" as all revenues generated by the Franchised Business, regardless of the form of payment. This includes revenues from the sale of approved products and services performed at or in connection with the Franchised Business.
Specifically, the definition of Net Sales includes monies or credit received from the sale of approved products or tangible property and services performed from, at, or in connection with the Franchised Business. This encompasses off-premises services like catering and delivery, as well as on-premises services such as games, gambling machines, or third-party advertising within the Franchised Business.
This means that if a Cinnabon franchisee operates gambling machines within their location (with approval), the revenue generated from those machines would be included in the calculation of Net Sales. This figure is important because it is used to calculate royalty fees and advertising contributions payable to Cinnabon. However, the inclusion of these activities is contingent upon Cinnabon's approval, as the document states that such activities may be conducted only if approved.