What is included in the definition of 'Gross Sales' when reporting to Cinnabon?

According to Cinnabon's 2025 Franchise Disclosure Document, Gross Sales, for reporting purposes, is defined as Net Sales plus any discounts from redeemed coupons and other reductions used to calculate Net Sales. This definition is solely for reporting to Cinnabon and does not affect the calculation of royalty fees and advertising contributions.

Cinnabon requires franchisees to submit weekly reports detailing Gross Sales and Net Sales, along with monthly profit and loss statements. These reports must adhere to Cinnabon's standards for accounting systems, procedures, and formats. Franchisees must accurately record all revenues the franchised business receives or is entitled to receive and maintain these financial records, along with supporting documentation, for at least three years. These records should not be commingled with those of other businesses.

It is important to note that Cinnabon has the right to inspect and audit a franchisee's financial records. If an audit reveals that Net Sales have been understated, the franchisee must immediately pay the owed royalty fees and advertising contributions, plus interest. If the understatement exceeds 2% of Net Sales, the franchisee must also reimburse Cinnabon for all expenses associated with the audit, including accounting and attorney's fees. Therefore, understanding the distinction between Gross Sales and Net Sales is crucial for accurate reporting and compliance with the franchise agreement.