Are sales of prepaid cards included in the Gross Sales calculation for a Crave Cookies franchise?
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, including but not limited to, all revenues from sales at the premises and from direct delivery, catering, and/or delivery services through a third party, sold by you, whether for cash or credit. Gross Sales does not include (i) bona fide refunds to customers, (ii) sales taxes collected, (iii) sale of used equipment not in the ordinary course of business, (iv) sales of prepaid cards or similar products (but the redemption of any such card or product will be included in Gross Sales), or (v) delivery expenses or third-party platform charges.
Source: Item 23 — RECEIPTS (FDD pages 47–194)
What This Means (2025 FDD)
According to Crave Cookies's 2025 Franchise Disclosure Document, the initial sale of prepaid cards is not included in the calculation of Gross Sales. However, the redemption of these prepaid cards is included in Gross Sales. Gross Sales is defined as the total dollar amount of all sales generated through the business, including payments for services or products, revenues from sales at the premises, direct delivery, catering, and delivery services through a third party, whether for cash or credit.
For a prospective Crave Cookies franchisee, this means that while the initial sale of a prepaid card does not contribute to the Gross Sales figure used for royalty calculations or other financial reporting, the value of the card when it is used by a customer to purchase cookies or other items will be counted as part of Gross Sales. This distinction is important for tracking revenue and understanding the basis on which royalties and other fees are calculated.
This practice is fairly common in the franchise industry, as it prevents franchisees from paying royalties on money received but not yet earned (since the cardholder has not yet made a purchase). It also aligns revenue recognition with the actual delivery of goods or services, which is a standard accounting principle. Franchisees should keep accurate records of both prepaid card sales and redemptions to ensure proper reporting of Gross Sales.