How does Cinnaholic define Gross Sales for royalty fee calculation?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
- 5.2. Definition of Gross Sales. Gross Sales shall mean the amount of sales of all products and services sold in, on, about or from the Bakery, together with any other revenues derived from the operation of the Bakery, whether by Franchisee or by any other person, whether or not in accordance with the terms hereof, and whether for cash or on a charge, credit, barter or time basis, including, but not limited to, all such sales and services (i) where orders originate and/or are accepted by Franchisee in the Bakery but delivery or performance thereof is made from or at any place other than the Bakery or (ii) pursuant to telephone or other similar orders received or filled at or in the Bakery. For purposes of determining the Royalty Fee and Advertising Fee, there shall be deducted from Gross Sales: (a) the amount of refunds, allowances or discounts to customers (including coupon sales) up to 10% of the Gross Sales, provided the related sales have previously been included in Gross Sales; and (b) the amount of any excise or sales tax levied upon retail sales and paid over to the appropriate governmental authority.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Gross Sales are defined as the total revenue from all products and services sold at the bakery. This includes all revenues derived from the bakery's operations, whether the sales are made directly by the franchisee or any other person, and regardless of whether the transactions are in cash, credit, barter, or on a time basis. Gross Sales also encompass sales where orders are taken at the bakery but delivery or performance occurs elsewhere, as well as sales from telephone or similar orders received or fulfilled at the bakery.
For the purpose of calculating both the Royalty Fee and the Advertising Fee, Cinnaholic allows for certain deductions from Gross Sales. These deductions include refunds, allowances, or discounts given to customers, including coupon sales, up to a maximum of 10% of Gross Sales, provided these sales were previously included in the Gross Sales figure. Additionally, the amount of any excise or sales tax levied on retail sales and paid to the appropriate governmental authority can also be deducted.
This definition is important for prospective Cinnaholic franchisees as it clearly outlines what revenue is subject to royalty and advertising fees. Franchisees should be aware of what constitutes Gross Sales and what deductions are permitted to accurately calculate and pay their fees. The allowance for deductions such as customer refunds and sales taxes can help reduce the overall fee burden, but franchisees must ensure they properly document these deductions to comply with Cinnaholic's reporting requirements.