For Crave Cookies franchises, how are Gross Sales calculated when a third-party delivery service is used?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
- "Gross Sales" is defined in our franchise agreement as the total dollar amount of all sales generated through your business for a given period, including, but not limited to, payment for any services or products sold by you, whether for cash or credit. Gross Sales does not include (i) tips, (ii) sales taxes collected, (iii) sales of prepaid cards or similar products (but the redemption of any such card or product will be included in Gross Sales). If Crave Cookies Franchising, LLC requires or approves Franchisee's use of a third-party delivery service, Gross Sales on deliveries will be calculated on the amount paid by the customer to the delivery service (not counting any delivery fee, service charge, or gratuity paid by the customer), rather than the amount paid by the delivery service to Franchisee. Please see your state-specific addendum for more information.
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2025 FDD)
According to Crave Cookies's 2025 Franchise Disclosure Document, Gross Sales are calculated differently when a third-party delivery service is involved. Specifically, Gross Sales are based on the amount the customer pays to the delivery service, excluding any delivery fees, service charges, or gratuities. This means that Crave Cookies franchisees pay royalties on the total amount charged to the customer by the third-party delivery service, not on the amount the delivery service remits to the franchisee.
This calculation method has significant implications for franchisees. It means that the royalty and marketing fund contributions, which are percentages of Gross Sales, are based on a higher figure than what the franchisee actually receives. This difference can impact the franchisee's profitability, as they are paying fees on money that goes to the delivery service rather than their own revenue. Franchisees need to carefully consider the costs associated with third-party delivery services, including the fees charged by the service and the impact on Gross Sales calculations.
For example, if a customer pays $30 to a delivery service for Crave Cookies, but the franchisee only receives $20 from the delivery service after their fees, the Gross Sales would be calculated on the $30. The franchisee would then pay royalty and marketing fund contributions based on this $30 figure, even though they only received $20. This can reduce the franchisee's profit margin on delivery orders. Franchisees should also consult their state-specific addendum for any additional information regarding Gross Sales calculations.
Prospective Crave Cookies franchisees should carefully evaluate the financial implications of using third-party delivery services and how it affects their royalty and marketing fund contribution obligations. Understanding this calculation is crucial for accurately projecting revenue and expenses and ensuring the profitability of their franchise.